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19/10/2021

A reader asks: What will the inflation rate be in the U.S. for the next two or three years?

The Committee says: "Price increases will vary from five to eight percent per year over the coming twenty four months, trending towards the upper end of this range, if the formulas used are not changed and money printing is not increased.

The urge to both alter the calculations, excluding higher price increases for certain goods and services, with a view to reporting a lower numbers, will be difficult to resist as elections in November 2022 approach. This is not guaranteed but likely.

If the money supply is increased, both from printing and maintenance of interest rates at or near current levels, which will be too low to contain rising prices, true inflation of prices could reach fifteen percent per year.

These decisions are not final. You now know the range."
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Bear in mind: the size, reach & effect of the USA's economic activity plus the factors now causing inflation to occur, are not limited to the USA and US dollar monetary policy. These effects will reverberate worldwide.

18 Comments

Scott2

19/10/2021 13:47:32

Will there be financial relief for people and businesses that already are experiencing hardships or will it sort of be everyone for themselves

Patrick

19/10/2021 15:09:50

The only individual financial relief any one person can have from price inflation, is not to buy.

Inflation is like a tax you have to pay but did not explicitly vote for. It is caused by increasing amounts of money pursuing the same or less goods & services.

Governments, through central bank monetary policy (printing and interest rates, for example) are what create & cause inflation.

19/10/2021 16:26:33

@Patrick yeah I should be more cynical about the government as there not much different than a company.

19/10/2021 17:23:09

Government is the OPPOSITE of a company or business. Sellers of goods & services have to persuade customers and face competitors.

Government has no competition, just force, authority and willingness to use the first to assert the second.

Ask an Aussie.

19/10/2021 17:46:38

@Patrick i meant in terms of how they seem more concerned about getting our money while trying to do as little in return. I saw a headline the other day how Trudeau plans to restrict movement among other things for the unvaccinated so that sounds like we're not far from the aussies.

19/10/2021 19:22:54

@ Scott2: Government is not concerned with getting money, they're only worried about getting re-elected. Government can confiscate as much money as officials want whenever wanted, but if tax rates are increased too much or collection methods seem too harsh, that can cause loss of support & votes. One answer has been to rig an election or just dispose of the process.

The problem with voting is, once people get a taste for it, it's nearly impossible to get rid of the practice without internment camps. Thus has the developed manipulation of public perception by means both honest and illegitimate.

Electronic voting took us back to The Stone Age in the USA. The last presidential election was fixed most professionally by way of the new method.

Wicktoria Fransson

19/10/2021 16:31:26

There is a new post from Matthew on thenewgoldenera.

19/10/2021 17:24:29

Okay, folks get ready. A big step in The Shift will soon be coming to a street corner near you. What and however this happens, plus the following effects, you are privileged beyond nearly every human in knowing why the crude oil shortage will happen (more correctly, has happened, by the time everybody's aware).

Don't abuse your Guru status but enjoy the limelight, the fame and the infamy you might get when you explain what you know, but almost nobody else does.

Saint Irene

19/10/2021 21:25:17

Does anyone else have trouble opening the posts on The New Golden Era? Both my computer, and my husband's less-than-one-year old computer cannot open them in the format they are in...

If at all possible, would someone be so kind as to copy and paste #325 Financial Implications of the Oil Shock? Many thanks!

19/10/2021 22:22:19

Thank you for posting this, Linda--very appreciated! Yikes--this oil shock may make the plan-demic look like a picnic in the park!

Linda

19/10/2021 21:51:32

325 – Financial Implications of the Oil Shock 16102021

Good afternoon Matthew, thank you for coming back yet again

Talking about the financial and economic impacts of the first Oil Shock

We should make it very clear at the outset that you will hardly be able to scratch the surface of these impacts in a document like this; this will really only be a very top-level view

The Oil Shock will come out of the blue, and it really will be a shock which will reverberate around the globe. The immediate concern obviously will be the securing of sufficient oil supplies into the future. However very quickly of course the effects will be felt across the board, particularly across all types of industry: manufacturing, travel and so on

This will obviously cause a good deal of alarm, as you can imagine, because it will happen so quickly, and nobody will really be prepared for this type of event

We thought it might be useful to look at it at three different levels: that of the country; of companies and corporations and of course the individual

So, the covid pandemic has - especially in your country Matthew - placed an enormous burden of debt on the state. We’re not going to hazard a guess at the borrowing but it’s certainly in the hundreds of billions of pounds. This will cause a problem as it will restrict the amount of support available at government level

At the corporate level, the effects will be wide-ranging. For example if you’re trying to fly an airline, but you have no idea of the availability or cost of fuel, you have a serious problem. Many types of manufacturing will be consuming oil not only as a fuel, but also as a raw material. So many components, so many manufactured goods rely on oil for their production. This will really very quickly become chaotic

You have seen over the last few months how interdependent industry actually is. The episode Matthew regarding CO2 in your country is a very good example of this, in that certain types of manufacturing process have by-products that are extremely important; they may even be more important than the manufactured item itself. This will be a very challenging time because of this serious interdependence

Finally on to the personal level: Personal levels of debt are high; the cost of borrowing over the last few years has been very low. Since the financial crash of 2007/8 a lot of work has been done to try to ensure such an event never happens again; ‘stress testing’ is one such activity that has been carried out. However, there will be other failures in the sector; that’s the seriousness of this event and the impact will be felt extremely widely

Individuals will immediately be concerned for their employment. They will be looking for some security in employment and obviously security of income. There will be turmoil for quite a period of time and so what you will see is that a lot of discretionary purchases will be put off

There will be a quite dramatic slump in the economy simply because demand will not be there from the consumer, and in many cases the supply from the manufacturer will be suffering from recent shortages as well as this latest headache to deal with

So, this document hasn’t even really begun to explore what is actually going to happen post the first oil Shock, which is literally anytime now. But it does give you a flavour of where we believe things will be moving

We hope to talk again soon

A very good morning

Gary

19/10/2021 23:30:20

What about the strength or value of the U.S. dollar vs other currencies in the next few years? If inflation is happening worldwide, then the U.S. dollar wouldn't lose its value vs other currencies, correct? So wouldn't we (people earning U.S. dollaz) enjoy some purchasing power via a strong U.S. dollar? Or is the U.S. dollar going to crash? Or am I an idiot?!

20/10/2021 14:34:48

Relative values between currencies, i.e. exchange rates, result from several factors, including 1. human reaction, 2. demand & supply of and for goods & services across national borders and 3. money supply.

Many moving parts are involved in each of these three things.

Jude

20/10/2021 00:35:08

Good morning to all, another volcano seems to have erupted:

https://youtu.be/Xi36UGVSpVU

Take care everybody 🙏🏻

20/10/2021 09:34:10

Wow! Thanks, Jude--great slow-motion video...

20/10/2021 14:30:26

Imagine being in THAT building, watching this eruption develop. Holy Excrement....
Unless my eyes & brain are failing (please withhold commentary about my cerebral organ, thank you) the night’s sky about now shows we are at full moon.

Lorri

20/10/2021 21:07:34

These people are having a really bad/exciting day at work.

I'd want to get the hell out of Dodge before hot ash enveloped me or my car.

Stephen

20/10/2021 03:56:12

A kind reminder that:
According to the forecast by the esteemed GAG, the imminent oil crisis is the first to come, and will subside after a while (a few months). A much bigger one will follow, both in magnitude (oil price going above US$150/barrel) and duration (5 to 15 years?), when most long distance transportation will be curtailed.
Coronavirus has, in a way, prepared us for much less travelling. We are getting used to staying put, even for work and school. The current blockage in shipping is also preparing us for more self-reliance. Very soon, shipping all the Chinese goods may not be so cheap, when transportation expenses are sky-high. May be some manufacturing jobs will come back to North America and Europe, afterall?
I know, the days of flying 2,000 km for meeting and back within the same day are long gone.

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