Grant states (start @17:59 on the video) that when the Fed cannot explain away persistent inflation of 4%, it clears its throat…”and says the party’s over.” “Everything would fall out of bed…gold would right itself, silver would right itself, because they are money which would come into their own after a cycle of disillusionment.”
Is Grant referring to the CPI rate of 4% that will cause the Fed to say “the party is over?” One must be nimble to exit gold and silver and hold cash before the Fed raises interest rates to a level equivalent to “the party’s over.”
Alternate Inflation Charts by John Williams, http://www.shadowstats.com/alternate_data/inflation-charts , shows CPI about 2% or 3% below 5%. The SGS alternative is slightly above 10%. Therefore, I presume Grant is referring to the CPI rate of 4%. SGS inflation has been above 5% since 1992.
I put no value in the CPI. It is a politically issued number, subject to manipulation. No one but the Fed and the political class argues that inflation is not a problem right now.
I think it is more reasonable to interpret Grant’s remarks as referring to a point where it becomes embarrassing for the Fed to continue to deny that inflation is a problem. That is the point to worry about, whatever that means in terms of some fallacious CPI figure.
My worry is from here forward until the end of June. I suspect that the Fed will announce that QE will cease sometime between now and then. That could trigger the selloff in markets that Grant fears.
The threat is real, but I do not think the Fed can stop. Without the Fed the government could not pay its bills. It cannot sell enough Treasuries in open markets. That doesn’t mean the Fed won’t try to bluff on this count.
Grant states (start @17:59 on the video) that when the Fed cannot explain away persistent inflation of 4%, it clears its throat…”and says the party’s over.” “Everything would fall out of bed…gold would right itself, silver would right itself, because they are money which would come into their own after a cycle of disillusionment.”
Is Grant referring to the CPI rate of 4% that will cause the Fed to say “the party is over?” One must be nimble to exit gold and silver and hold cash before the Fed raises interest rates to a level equivalent to “the party’s over.”
Alternate Inflation Charts by John Williams, http://www.shadowstats.com/alternate_data/inflation-charts , shows CPI about 2% or 3% below 5%. The SGS alternative is slightly above 10%. Therefore, I presume Grant is referring to the CPI rate of 4%. SGS inflation has been above 5% since 1992.
Any opinions?
ER,
I put no value in the CPI. It is a politically issued number, subject to manipulation. No one but the Fed and the political class argues that inflation is not a problem right now.
I think it is more reasonable to interpret Grant’s remarks as referring to a point where it becomes embarrassing for the Fed to continue to deny that inflation is a problem. That is the point to worry about, whatever that means in terms of some fallacious CPI figure.
My worry is from here forward until the end of June. I suspect that the Fed will announce that QE will cease sometime between now and then. That could trigger the selloff in markets that Grant fears.
The threat is real, but I do not think the Fed can stop. Without the Fed the government could not pay its bills. It cannot sell enough Treasuries in open markets. That doesn’t mean the Fed won’t try to bluff on this count.