“..contrary to history, the Fed is refusing to raise rates to stem inflation—falsely claiming it is only a “temporary” blip. They have always let rates rise before with high demand, but not now. Something different is going on, which tells me there is a nasty agenda afoot.”

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World Affairs Brief, May 14, 2021 Commentary and Insights on a Troubled World.

Copyright Joel Skousen. Partial quotations with attribution permitted. Cite source as Joel Skousen’s World Affairs Brief (http://www.worldaffairsbrief.com).

HIGHER INFLATION IS HERE—AND IT WON’T BE SHORT-LIVED

Federal Reserve chairman Jerome Powell had to acknowledge signs of higher inflation but said he won’t be raising interest rates because this bout with inflation will be “short lived.” This week I will tell you why it won’t be short lived and why the Powers that Be (PTB) actually want a damaging period of inflation as part of their drive to undermine the private economy, discredit free markets and further induce people to demand more socialist controls and higher taxes on “the rich.” Ironically, the middle class could soon find themselves in the higher tax bracket as inflation drives incomes higher. By artificially keeping interest rates low, the FED and member banks are systematically denying people’s savings an honest return on their money, and inducing many to seek higher returns elsewhere, in either stocks or cryptocurrencies. Gold and silver, the traditional hedges against inflation are under continued and constant manipulation in order to keep their prices stagnant, which is also driving even more money into the bubble of stocks and cryptos. And, as millions of people are bailing out of blue states and trying to relocate to somewhat safer red states, they are finding a very limited supply of quality used homes, and building prices rising every day. I have long feared that when people wait to relocate and prepare until the world visibly starts to fall apart, it will become unaffordable to relocate and one’s choices will be increasingly limited. Sadly, it doesn’t look like it is going to get any better by waiting.

Statistician and economist John Williams keeps tabs on the real rate of inflation versus the Commerce Bureau’s falsified and understated numbers. Here are the latest headlines at his website, ShadowStats.com: “Pandemic-Driven U.S. Economic Collapse Continues to Harden in a Protracted ‘L’-Shaped Non-Recovery”

An L-shaped recovery is characterized by a slow rate of recovery, with persistent unemployment and stagnant economic growth, caused by various interest rate and regulatory hurdles that hamper free markets. In this case, Williams is predicting an L-shaped NON-recovery, due to high inflation. True inflation has always been between 6-9% for the past 20 years, which people have learned to live with—mostly because the government distorts people’s view by claiming that inflation is a low 2-3% which is a lie.

During an inflationary period, people who sell a house at apparent high prices find out how little real profit they have made when all the other houses have gone up similarly. The only way to improve your situation is to move to a lower priced real estate market to take advantage of that paper “gain.” In today’s world of fast rising prices contractors and businesses can barely keep up with rising prices, and find that their newly won profits quickly disappear against rising prices they themselves must pay. He then explains the culprit that began it all—the unnecessary economic lockdown of the false Covid pandemic:

Severe Systemic Structural Damage from the Shutdown Is Forestalling Meaningful Economic Rebound into 2022 or Beyond.. Panicked, Unlimited Federal Reserve Money Creation and Federal Government Deficit Spending Continue and Will Expand, Triggering Major Domestic Inflation.

The Consumer Price Index (CPI) is always understated by at least a factor of 3. The government has done this not only to tamp down on people’s perception of inflation, but to keep the interest rate low that government has to offer on its bonds, to stave off the year of its inevitable default when interest payments exceed total tax revenues. Here is his summary of what the Bureau of Labor Statistics tells about inflation, which is a LOT higher than what they have been telling us for years, but still understated.

April 2021 Producer Prices exploded across the board, with record levels of year-to-year Inflation at 6.17% for the Total PPI-FD (Producer Price Index, Final Demand), 10.70% for the PPI-FD Goods Sector and 4.02% for the PPI-FD Services Sector... Those record annual inflation levels were in context of the current PPI historical series that began in November 2009. [Which were between 2-3%.]

Then he gives the manipulated Consumer Price Index (CPI) numbers:

(May 12) Year-to-Year April 2021 Consumer Price Inflation (CPI-U) surged by 4.16%, its strongest reading since September 2008, up from 2.62% in March 2021 (BLS). In March, energy prices gained 5.00%, with “Food” up by 0.37% in April, having gained 0.11% in March.

But here are the REAL NUMBERS of inflation:

Year-to-Year April 2021 ShadowStats: Alternate CPI (1980 Base) Inflation jumped to a thirteen-year high of 12.1%, up from 10.4% in March 2021, 9.4% in February 2021 and against 9.1% in January 2021. The ShadowStats Alternate CPI-U estimate restates current headline inflation so as to reverse the government’s inflation-reducing gimmicks of the last four decades, which were designed specifically to reduce/ understate annual Cost of Living Adjustments.

With inflation obvious to all, what the government has tried to avoid for many years is now happening. People are starting to panic and buy before prices rise, and businessmen are raising prices rapidly far beyond what their supplies are costing them. When you ask them why the sudden price increase, and they pass along the same excuses their suppliers are giving such as, “my fuel costs are rising.” But, the percentage of fuel cost to their overall cost basis is small. They are raising prices because they can. It’s a kind of “catch the inflationary wave” mentality.

Basic commodities like corn is a good example. Sure diesel fuel for farms may have gone up by 20%, but as Michael Snyder points out,

… the price of corn has risen 142 percent in the last 12 months? Of course corn is used in hundreds of different products we buy at the grocery store, and so everyone is going to feel the pain of this price increase. But it isn’t just the price of corn that is going crazy. We are seeing food prices shoot up dramatically all across the industry, and experts are warning that this is just the very beginning. So if you think that food prices are bad now, just wait, because they are going to get a whole lot worse.

There is no way that demand for corn products has increased by almost 50%, nor are there severe shortages this year. And, you can bet the farmer isn’t being paid much more for his corn. It is the big agri-industry leaders that are jacking up prices. I think there is an agenda going on behind the scenes, led by the Deep State which controls the Democratic party and the mainstream leaders in the Republican party. Worse, almost all big corporations, especially those with international connections, are in lock step with this control mechanism. Snyder predicts that soon less well-healed consumers are going to be paying 40% of their income just for food.

In 2019, Americans spent an average of 9.5 percent of their disposable personal incomes on food—divided between food at home (4.9 percent) and food away from home (4.6 percent). Between 1960 and 1998, the average share of disposable personal income spent on total food by Americans, on average, fell from 17.0 to 10.1 percent, driven by a declining share of income spent on food at home.

According to the USDA, the poorest households spent an average of 36 percent of their disposable personal incomes on food in 2019…Needless to say, the final numbers for 2020 will be quite a bit higher, and many believe that eventually the percentage of disposable personal income that the average U.S. household spends on food will reach 40 percent.

Tucker Carlson took up the plight of consumers paying higher prices for everything during a recent show on Fox News.

He cited corn going up 50% (it’s now almost triple that), wood building materials doubling (now almost 4x higher in the West), and cement and steel prices having risen too.

Carlson complained that because of overly generous unemployment benefits, we have rising unemployment in an atmosphere of labor shortages, which is a distortion of normal economic principles—caused by the Biden administration. “We have EIGHT MILLION job vacancies – the most since 2000 – as Biden’s handouts makes it PAY to stay home,” he said.

Now we have gas shortages in a country that was recently oil independent. Pipelines have been shutdown, and fracking limited.

Tucker complained also that the Pro-Biden establishment was in denial: The NY Times told us, “Since the pipeline shut down, there have been no long lines at gas stations.” This was edited out a few hours later without apology or explanation. But the NY Times tweet still persists online without correction. As of last Wednesday, 6% of all GA stations were out of gas, 8% in VA and 8.5% in NC and in Atlanta, a full 20% were out of fuel—and he showed pictures of long lines everywhere else. Prices have risen dramatically in areas affected, and even California (which always has the highest gas prices) has started to raise its prices again, as if they were affected directly, which they weren’t.

But the biggest single factor driving inflation is the price of home construction. Lumber prices are 4x higher than normal in the West. But since the CPI excludes things that people don’t buy regularly, they don’t count lumber in computing the CPI. But higher demand for new houses and apartments not only drives up building costs but has a ripple effect on everything people buy for a home.

Since last year, you couldn’t find a single freezer at Lowes or Home Depot—you had to order it. Part of this was driven by the increased awareness of preparedness. People were stocking up on everything, and the demand for freezers outstripped supply. Prices weren’t rising initially but now they are—every month. But most everything in the building and household supply industry is actually being driven by two primary factors:

1) The surge in relocation as people move out of blue states and big cities where the Covid restrictions are the most onerous and hated.

2) The artificially low interest rates the FED is maintaining make it too easy for people to get a building loan, or a loan to purchase an existing home, creating high demand and outstripping the slow-to-respond supply chain.

The housing market was relatively stagnant until two years ago due to the 2008 mortgage collapse recession, and only picked up after a long period of pent up demand coupled with the stimulus of artificially low interest rates.

Big complex supply markets like building materials and appliances are fairly slow to react to rapid changes. They are reluctant to invest millions in new factory output because the housing market has always been fairly volatile and highly dependent upon interest rates—determined not by free markets but the whims of the FED.

Because of this, there are demand-created shortages all across the construction and appliance economy. Demand has outstripped the parts supplies in manufacturing. Appliance manufacturers can’t increase production because they can’t get parts fast enough, and supplies can’t increase with production fast enough.

Even when the housing market started to boom, few expected the Fed to keep rates low even as prices were rising—which keeps companies from expanding rapidly, for fear of a fickle downturn later. But, contrary to history, the Fed is refusing to raise rates to stem inflation—falsely claiming it is only a “temporary” blip. They have always let rates rise before with high demand, but not now. Something different is going on, which tells me there is a nasty agenda afoot.

Here is the evidence of how and why I think the Powers That Be are not trying to reign in inflation this time, now that it has become obvious to all.

First, the how: 1) The FED keeps priming the pump with trillions of bailout dollars. In 2008, when Americans received two $500 bailout checks, we had the highest rate of inflation in 2 decades during the following 12 months. Today government checks are being distributed that exceed $2000 per person—a lot more disposable cash to spend—and they are spending it all.

2) The FED is keeping interest rates way too low. This not only feeds the housing boom which is the leading cause of inflationary demand, but it also protects the huge bond markets from collapse. The Treasury has been selling trillions of dollars in new bonds at low interest rates, and if interest rates were to rise, those bonds would lose value quickly. The bond market is huge.

3) Shutting down energy supplies: The Biden administration’s re-application of excessive environmental restrictions on oil and gas fracking, drilling, and leasing has killed US surplus oil and gas production. One of Biden’s first acts in office was to cancel the Keystone Pipeline, killing thousands of contracts and jobs. Then, the Colonial oil pipeline was sidelined by apparent ransomware hacking. They reportedly paid the ransom—which appears in hindsight to have been unnecessary since The pipeline is being restarted now using backup computers. It will take a couple of weeks to reach full production. Now Gov. Whitmer of Michigan just ordered a Canadian company to shut down the oil pipeline that transits the Mackinaw strait, despite widespread fuel shortages. That’s no coincidence.

Renewed environmental regulations were also a key factor in the Texas electrical grid failing during the massive ice storm, and gas pipelines were sidelined for lack of electricity.

The media and government have been quick to point blame at Russia for the Colonial Pipeline cyberattack, but that is totally illogical. If you were planning a grand nuclear war against the West, would you alert them to the threat by little irritating attacks like this? Hardly. This smacks of hackers controlled by the Deep State. The US Deep State intel agencies have repeatedly and falsely blamed Russia for hacking the DNC’s computers to help Trump win, but nothing has turned out to be true.

First, let’s look at why the pipeline could have continued operation. According to the Daily Mail Colonial itself admitted that the hack only affected its IT systems and not the computer systems that actually control the pipeline. I suspect it was regulators that required them to shut down for “safety” reasons rather than run it manually—which could easily have been done by staff manually at each pumping station keeping in touch with controllers by cellphone. Alex Jones got a call on air from a pipeline inspector confirming that the pipeline did not have to be totally shut down.

Colonial ended up paying the $5M ransom to the hackers in cryptocurrency to de-crypt their software, which is bad policy. That only encourages more ransom attacks. According to Bloomberg News,

The company paid the hefty ransom in untraceable cryptocurrency within hours after the attack, underscoring the immense pressure faced by the Georgia-based operator to get gasoline and jet fuel flowing again to major cities along the Eastern Seaboard, those people said. A third person familiar with the situation said U.S. government officials are aware that Colonial made the payment.

The Biden administration was lying when they said they didn’t know.

Once they received the payment, the hackers provided the operator with a decrypting tool to restore its disabled computer network. The tool was so slow that the company continued using its own backups to help restore the system, one of the people familiar with the company’s efforts said.

Not only do we find out they could have run the pipeline manually, but they were using backup software to help restore the system. Why weren’t they prepared to fully replace the computers and software in case of such an attack? Having a duplicate set ready to go, “plug and play” is essential nowadays. And why keep essential infrastructure computers connected to the internet at all?

Tucker Carlson warned Tuesday that the disruption in the Colonial Pipeline and the resulting shortage panic is being carried out by design.

Comparing the scenes to Venezuela, Carlson noted that the New York Times says this is just another “conspiracy theory”. “On some level, let’s be honest about it, the White House approves of this disaster,” Carlson proclaimed, adding that “the lunatics plan to close every gas station in the entire United States, shuttered forever, to make way for some new as yet not quite defined means of [electric] transportation that will magically replace the gasoline engines that we have used for more than a hundred years.”

Carlson continued “bad federal policies are distorting the price of everything in this country from two by fours to diesel fuel to corndogs.” “None of this is an accident just as it wasn’t an accident when the power went out in Texas over the winter,” the host continued, adding “It wasn’t a cold snap that did it. It was a federal policy that encouraged the state to rely on windmills which don’t actually work.”

Second, the Why:

I believe it has to do with the “great reset” the globalists created in the wake of the exaggerated pandemic. Locking down the small business and restaurant economy and then offering periodic stimulus payments got everyone on the dole, and each bailout bill had lots of bad legislation in it furthering government control—one of the goals of the Great Reset.

Creating high inflation allows Democrats to decry the not-so-free markets; blame them, and induce people to demand price controls, which Richard Nixon succumbed to during the high inflation of 1971. If price controls ever get reinstalled, I suspect they will keep them in place and never let us be free from them again—much like these pandemic restrictions. Price controls are a key aspect of Fabian socialist “solutions,” and may well lead to calls for even more government controls in healthcare, housing, and food.