Five years; The Dow Jones Commodity Index (line) has outperformed all the other major commodity indexes, including the CRB Index (shaded area). Though commodities have lifted off their lows, demand has not followed in line.
Commodity indexes with multiple expiration dates have not followed much higher, and the long-term prognosis for commodities is still not promising. As demand shifts lower, the economy stalls, which allows central banks to lower rates and bond yields. These lower rates lowers the costs of capital and allows producers to lower their costs of production, which leads to oversupplied markets.
The large speculators will have to eventually cover these large short positions, pressuring the 30-year bond yield to move lower.
The strucural deflationary forces could become large enough for the governments to begin seriously experimenting with universal basic income programs.
2) The logic fallacies of the Libertarian and alt-media crowd. They cannot comprehend why we have such a corrupt monetary and financial system. As a result, these analysts continue to underestimate this system’s power to exploit the masses.
1) Jerome Powell this morning reiterated his concerns for deflation in the future. Despite the growing economic data, we need to comprehend that the nation states have injected at least $12 trillion in fiscal stimulus to keep the economy moving forward. Without this massive support, the economy would have spiraled down.
2) While a growing consensus of traders are concerned that the Democrats will step up fiscal stimulus and social spending, my take is more straightforward. Saner heads will eventually prevail, and if the USDX falls while bond yields rise, Democrat leadership will scale back their ambitions. I also have to believe that most of the large spending initiatives are not very feasible to begin with. For instance, I doubt any comprehensive student loan debt forgiveness can ever be enacted. That would prove very inflationary and costly to the government.
3) We need to keep in mind that there are a number of possible deflationary scenarios that can be triggered if inflation begins to climb above trend. We are entering the winter season in the Northern hemisphere, and TPTB can easily enact more lockdowns. Keep in mind that these crises are all manufactured anyway.
1) Important and counterintuitive analysis on the topic of inflation.
Manufactured and avoidable crises like 9/11, 2008, and COVID, provide the necessary demand destruction for QE to flourish. They are excuses for more centralized government control and run cover for the central banks to collapse bond yields; none of which would be acceptable under normal circumstances.
The nation-state governments are embarking on counter-cyclical tax policies to ostensibly help their citizens. Ironically, these policies will ultimately destroy those for which these plans were designed to help, while helping those with the assets. Of course, that is the true plan all along, but a demoralized populace is too stupid and greedy to know better.
2) Since 2013, we have placed the correct sector bets on the stock, bond, and real estate sectors. What is in store for the next couple years? Listen.
Annual inflation in the euro area averaged 2.3% from 1999 to 2008, at which time the global financial crisis hit. Since 2008, inflation has only averaged 1.2% until the end of 2019, according to ECB data.
The verdict has been rendered; QE and its offshoots are deflationary by function and the central banks know it. Since QE (2008), published inflation data have waned. Their remedy is for more poison to cure the disease caused by the poison. They know the effects of QE, but have another secret agenda; the consolidation of global wealth.
It’s not the low interest rates that are deflationary, rather it is the massive and growing sovereign debt pile that is sucking the life force out of the global economy. Over time, a greater portion of economic potential is devoted to servicing old and outstanding debt. This is the primary cause of the deflationary pressures and waning long-term trend economic growth. In an oversupplied global economy, inflation can remain low and the central banks can then collapse the yield curve to keep the nation state governments in business.
3) Three trillion in federal fiscal stimulus and this is the best that economic and inflationary data can perform. The prospects going forward are not auspicious for a reversal from the longer-term trend.
4) There is a permanent underclass of proles that will never again be able to bid up prices. Unemployment data has plateaued and will not fall unless the federal government intervenes again.
95% of the population have been properly demoralized to freely accept their current NWO-manufactured reality. I am less concerned about government policy, and more concerned with the average citizen. These demoralized and enslaved people are under complete mind control and have been properly conditioned to accept anything. They are our worst enemies.
Governments no longer need groups like the Brownshirts and Stasi, or the DHS “See something, say something” program. Social media platforms provide all the surveillance that governments need to enslave their citizens. People freely surveille others and take glee in reporting those who are different.
5) The massive fiscal deficit spending has only benefited the top 10% at the expense of all the others.
It doesn’t matter how the deficits are achieved and how the money is spent. Every dollar can be spent on reparations, student loan forgiveness, welfare, or military; it doesn’t matter. These dollars ultimately trickle up to those with the income generating assets. This is deflationary as the bottom 90% lose spending power over time and provide less overall demand.
While all economic participants are left servicing the resulting fiscal debt accumulation, those not properly aligned to benefit from higher asset prices fall further behind. The more income producing assets a person owns, the better a person is aligned to profit. This is why the wealthiest tend to be liberal. They benefit the most from government largesse and they know it. Just like Judas, who was in charge of the bag, liberals love spending others people’s money.
Over the past 40 years, the large corporations have completely taken over the local economies as these larger retailers and firms put the rest of the area out of business. These large corporations suck out the economic life force from the local economies as profits are transferred to the wealthy company stakeholders who don’t live in the area. The only economic benefit to the local economy is by the additional hiring, but these jobs have replaced the upper tiers of higher paying jobs, while decimating local entrepreneurship.
Massive deficit fiscal spending is then injected into the local economies, which only provide an illusion of economic equilibrium. These dollars again get vacuumed out of the local economies, whose citizens then demand more government spending. The cycle never ends.
