If you believe

If you believe the CPI (inflation) is 6.5% then have I got a bridge for you! First off, has anyone been shopping at all since the holidays? At Sam's Club I'm seeing 75% and 50% increases myself. I know, it's "all about me" and "my experience might not be representative"... Not representative my foot! Unless the only thing you bought last year was a smartphone then you already know that the official number isn't "representative" of the facts. Not even close.

At what point does any normal person stop relying on unreliable sources? How many times does any source need to be dead-wrong before we can move on and kind of ignore them? Once, ten times.. a thousand?

"Yesterday’s Calendar-Year 2022 headline CPI-U Annual Inflation of 8.0% was the worst since 1981. That said, the ShadowStats Alternate Calendar-Year 2022 Annual Inflation of 16.2% was the worst in 105 years, since 1918, the last year of World War I. Separately, the BLS announced it would gimmick headline CPI inflation reporting anew, in the year ahead, inconsistent with 2022 reporting."

So, that number is what our actual inflation is on average if you calculate the CPI using the same calculation method the government used in 1980. By changing the method used to calculate the CPI, they can goal-seek any number they want but folks out in the stores can see the truth and they adjust according to what is left over, or not, in their own personal finances.

Retail is experiencing some pretty obvious symptoms of a systemic downturn which looks as if they will soon become convulsions. High profile BK's like Blood, Bath & Beyond will soon be followed by more, less obvious victims:

"dwindling financial reserves from the government’s support during the height of the pandemic made consumers that much more reluctant to spend. By the time November’s retail sales report showed up, it was clear that consumers were slow to buy unless there was a deal, according to several analysts’ research. Executives at Macy’s and Nordstrom in early December reported a noticeable retreat on the part of shoppers."

It's pretty obvious what's happening: Consumers are seeing increases in their outlays without corresponding increases in their income. That is the definition of "Stagflation" - and condition where costs rise dramatically while incomes stagnate.

"Nearly two-thirds of consumer spending goes into services. Services include housing, insurance, healthcare, education, travel and hotel bookings, subscriptions, streaming, telecommunication, haircuts…. And this is where inflation is now raging. This is where inflation has gotten entrenched."

These glaringly obvious conditions are being experienced by millions of people every day. Meanwhile, the Federal Reserve is busy raising rates to fight the inflation THEY created by pumping Trillions of dollars "Ex Nihilo" into the economy. Now we have to be lectured to by Jay (J-Pain) Powell about how we all need to suffer in order to "win this fight".

It would be exactly like an arsonist who just set fire to an entire building showing up dressed like a fire-fighter to lecture everyone devastated by the blaze about fire-safety.

Interest rates have exploded higher in the heavily subsidized-by-the-Fed banking industry and many lines and liquidity sources are drying up. Tightening begets more tightening. Lenders are taking a very risk-off stance. Even though they have a lot of capital they don't have any liquidity.

"The losses were the result of the Fed's own rate hikes, which increased the amount of interest the Fed has to pay to banks on their deposits and to money market funds that make overnight loans to the Fed. Its net income plummeted, and the interest earned from its bond holdings was eventually not enough to offset the costs. How much is the Fed paying banks? Simple: there is currently $2.18TN in reverse repos parked at the Fed which receive interest at the effective Fed Funds rate (4.33% today), as well as $3.08 trillion in reserves, which are paid at the Interest On Reserve Balances rate (4.40%). Add it across, and we get approximately $650 million in daily interest which the Fed pays to dozens of foreign and domestic banks and other financial institutions."
Not bad work if you can get it.

Something has to give people; this is unsustainable. Just saying

"There is only one way for the gap to narrow which is an implosion of the debt through default, both sovereign and private. Such an implosion will also lead to all assets inflated by the debt – including bonds, stocks and property – also imploding."

As a lender I am fearful of the "R" word but, there it is! - Everyone be safe out there but get snappin'! If you fail to prepare then prepare to fail. There will be huge opportunity for those ready to strike when opportunity comes knocking. Call me whenever that happens and I'll get the funding you need when you need it!

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