This first graph is a comparison of CPI inflation in red, and SGS Alternate CPI which is real inflation in blue. Obviously, real inflation is being hidden from much of the public, but the trends are identical. Inflation is OUT OF CONTROL:
This 25 bps rate hike from last Wednesday will make NO difference to inflation. It will make NO difference in June either, after the next FOMC meeting. What will make a diffence to inflation is this:
The blip up on the SPR (strategic petroleum reserves) holdings was 2019 and early 2020. Since the Biden administration took over in the US, the trend has been straight down. However, the trend has been going down 12 years, overall. High gas prices will lead all other prices up. 25 bps rate hikes will not stop this. They may eventually (Fall 22’?), lead to a stock market crash, which will drag real estate down with it. As the interest rates rise in 2022, the pins of the monetary system have been removed and it is beginning to crumble. We expect a crack up boom in terms of the US dollar which is the DXY index. It is going higher now, but eventually the dollar will reverse. Inflation will stay high and continue higher due to M2 money stock and money printing in general. If Russia stays out of the monetary (SWIFT) banking system, which appears likely. Then, that would lead to dedollarization on a global scale!
Here is a case in point, view on twitter.
El Salvador, Ukraine, and Maylasia all have proposed Bitcoin as legal tender and El Salvador, Ukraine have passed bills to that effect. This trend will get bigger. Gold will also thrive in a liquidity crisis. Taking Russia out of the monetary banking system kicked this off!
When considering Bitcoin in a supply disruption, rising rate, rising inflation environment. It is a ticking time bomb. Bitcoin will break out depending on when the global macro situation in Ukraine is resolved with a peace agreement. Then, we have to consider Taiwan which is also a likely crisis that will come up after Ukraine get’s it’s peace agreement. This will eventually mean stimulus will come back as it did during Covid 19. This pays for the defense spending that is inevitable not to mention the food inflation issues that are heading our way. Gold and Bitcoin will both benefit, but Bitcoin to a much greater extent. Neutral ATM sold off all of our Gold for Bitcoin. Here is a long range chart showing us how small bear markets, and kangaroo markets (currently) actually are when one takes a long range view: