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Why Can’t Financial Experts Agree On How To Fix Inflation ?

By January 18, 2022 No Comments

Inflation has hit its highest level in 40 years, and there will be at least 4 interest rate hikes in the coming year. Meanwhile, the Feds keep printing money 24/7.

Jamie Diamon, CEO of Chase Bank stated that he can foresee up to 7 interest rates hikes in 2022. This will add to the burden of many Americans and will lead to massive foreclosures, layoffs, and poverty who have suffered through the last 2+ years of food shortages, and mass layoffs.  

There is dissension in the ranks of the government’s monetary czars

and their chiefs. Jerome Powell has had to backtrack on his claim that inflation is transitory, as high-ranking economists shake their heads as inflation spins out of control. There is no wrong or there is no right, there is simply a state of confusion with those who hold our county’s wealth and our wealth in their hands.

Up until the last quarter of 2021 Jerome Powell was stating that there will be no interest rate hikes until mid to late 2023 to ease the burden on households. As if by magic that seems to have been forgotten, as with his statements that inflation is transitory.

America is moving closer to recession as the stimulus and quantitative easing stop the illusion that all is well. Unfortunately, this time the resources of 2008 will not be able to save the massive crippling effects as most pillars of financial security fail. 

A Keynesian approach cannot solve the problem in our economy.  

Keynes a British economist was affected by the recession of the 1930s in England. He proposed that the government spend more money and cut taxes to turn a budget deficit, which would increase consumer demand in the economy. Keynesian theorists argue that economies do not stabilize themselves very quickly and require active intervention that boosts short-term demand in the economy.

Blame the Supply chain issues

Inflation is not directly linked to supply chain issues, by calling all problems Supply chain issues economists are really not looking into the problems. We had a “Great toilet paper” shortage for 1 month in March 2020, there are not enough chips for new cars, and we have a shortage of lumber for houses.

Stores and retailers are using this crisis to prey on people. There is more price gouging and hoarding in the economy to create an overinflated supply issue. The fact is that while there is a mass of ships circling Long Beach and other ports, the majority of the necessities are in stock. The panic buying brought on by the media and influencers is creating fear and scarcity of some products. 

trump vs biden inflation

German Economic Recession should be taken seriously

Germany reported more than 90,000 daily new infections on Friday, threatening staff shortages, production cuts, and potentially tighter restrictions. Meanwhile, power and heating costs have soared, while microchips and other inputs for factories remain scarce.

“I don’t have a whole lot of imagination for positive impulses — supply bottlenecks are persisting, the surge in energy prices is only now reaching consumers, and services are weakened by the virus,” said Andreas Scheuerle, an economist at Dekabank who sees output falling 0.8% between January and March.

The top 10 billionaires doubled their wealth through the pandemic.

Jeff Bezos, Elon Musk, and Richard Branson left the planet long ago in their way of thinking. As people suffered they rejoiced at spending billions to get a 20-minute ride on the edge of space. As with Steve Jobs or Kim Kardashian, many people follow the money, not the trails of devastation. Jeff Bezos makes 15,000 per second, that is not what his company makes, that is his money.

California fiscal policies are out of control

Los Angeles celebrates their new 6th street viaduct, essentially a new bridge in the downtown area. The project started 6 years ago and will open in the summer. Let’s think about this issue. The bureaucracy and timeline to build a bridge and the costs involved. Bridge construction has experienced several years-long construction delays and multi-million dollar cost increases.

If this is how the build-back better spending will go, then we will be in flying cars before they get to work on major infrastructure repairs.
California has long stated that its public outreach and public health programs are top priorities. Driving through Culver City, Santa Monica or downtown LA shows that this has failed.

The Los Angeles approach to buying Hotels for the homeless population is one of the biggest wastes of public resources with no benefits to those they are claiming to help.

Financial Experts can’t agree because there is no clear cut solution to fix the economy

This is the problem today. We are in a pseudo-crypto market, there is really no solution or true strategy just FOMO or Moon. Every logical tactic is met with an illogical reaction and as we move into 2022 we will see more bizarre actions to try to keep the US out of recession on a daily basis.

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