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Biden's Lie of the Day: "Make No Mistake, Inflation is Largely the Fault of Putin"

Let's take a look at the scapegoat of the day and how ridiculous it really is.
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CPI data from BLS, chart by Mish

CPI data from BLS, chart by Mish

Scapegoat of the Day

Make No Mistake 

Biden is a liar. Of course they all are.

Not Even the Wall Street Journal Gets It Accurately

Please consider The Fed Needs to Put Its Eye on the Money Supply

The true source of the current inflation is the cumulative increase in the money supply measured by M2 since February 2020—an incredible 41.2%. In January the rate of growth of M2, even after three months of tapering bond purchases by the Fed, was still 12.6% over its level a year earlier. That’s about double the rate it needs to be to hit the Fed’s 2% inflation target.

I Object to the Narrative

I don't object to the WSJ title, I object to the narrative and the implications.

Inflation has been rampant all along. Yes, the Fed is to blame. But that inflation was primarily in asset prices. 

In January of 2021, the year-over-year CPI was only 1.4%.  

Economists, including the Fed, are brainwashed into believing inflation is about consumer prices. 

Home prices are not in the CPI.

Not Inflation?!

Case-Shiller Home Price Index data St. Louis Fed, chart by Mish

Case-Shiller Home Price Index data St. Louis Fed, chart by Mish

Smell the Fire

Inflation, as accurately measured by asset prices has been on a rampage since 2013. The Fed not only stood by and watched that, it encouraged speculative behavior.

The Fed wanted to make up for lack of prior inflation that was blazing right in front of its nose. 

Why Did the CPI Finally Jump?

Real Income and Spending Billions of Dollars 2022-01

Helicopter Drop

Those blaming money supply have the wrong narrative. It was FREE MONEY. 

Note those three spikes on that top yellow line. One was on Trump's watch, the other two, and the biggest one was courtesy of the Biden Administration.

Those were three rounds of free helicopter drop money.

The CPI took off after Biden did a massive shotgun blast of free money to nearly everyone. 

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And that was on top of rent moratoriums that also put money in people's pockets.

Teamwork!

The irresponsible Fed added fuel to the inferno via totally inane QE policy further goosing housing. 

The Fed goosed assets while Biden goosed spending. That's the lethal combination explaining what happened. 

Sure, Russia is further exacerbating the problem. But Putin did not invade until February 24, 2022. 

The CPI took off in early 2021 following free helicopter drop money. But inflation, as measured by asset price bubbles had been brewing since 2013.

Fed Cannot Fix This Mess

The Fed cannot possibly fix the geopolitical mess on top of Biden's mess, on top of it's own lingering mess.

Don't expect anyone to admit huge policy errors. Do expect more scapegoats in every corner.

Real Wages Decline 12 Times in the Last 14 Months

Hourly Earnings and Real Hourly Earnings Since 1964 - Data BLS - Chart and Calculations by Mish

Hourly Earnings and Real Hourly Earnings Since 1964 - Data BLS - Chart and Calculations by Mish

Meanwhile, thanks "largely" if not entirety to the Fed and politicians Real Wages Decline 12 Times in the Last 14 Months

But ignore the last year and take a look at the above chart. 

In the last 49 years wages have risen about half of a penny per hour per year, and that assumes you believe the CPI is accurate. 

Thank the Fed and politicians working hand in hand to destroy the US dollar.

Bubbles Will Pop

Please note Most People Have No Idea How Much Stocks are Likely to Crash

As a result of these bubbles popping, expect a big deflationary crash. Then it will depend on how reckless the Fed and Congress gets.

The Benefits of Running the CPI Hot

Meanwhile, Fed jackasses, especially Chicago Fed President Praises the "Benefits of Running the Economy Hot"

This post originated on MishTalk.Com.

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