Fed Chairman Powell spoke after the FOMC meeting and did not say much. Just that the Fed could, might, may raise rates in March. What? They might? They may? Or they may not. A nothing burger! We predict the FOMC meeting announcement in March will be the same. They kick the can to May. In May, they kick it again! Here is a funny picture of the Monetary System in it’s current state:
The monetary system really is broken. The Fed should not have control over money supply for the entire planet!
Now look at money supply. Remember early this week our blog said; $52 trillion in unfunded debt on the books in 2008. Now that number is over $86 trillion in unfunded debt on the books! The credit system survives if base money growth exceeds the credit given out. Base money feeds on itself with the credit system. Case in point:
Here is another question for you. Why has WTI Oil been allowed to swing from -$37 to +$88 between April 2020 and January 2022? The petroleum strategic reserves were used to increase supply of oil. Therefore, prices will now skyrocket because the US strategic reserves are very dangerousely low. Here is a recent WTI Oil price chart:
Oil has the highest inflation this last year compared to any other goods inflation rate. It is one of the highest costs for goods to be transported. Therefore, Oil prices will lead inflation in other durable goods like all food products, steel, automobiles, lumber, construction goods. This is why CPI inflation is 7% and real inflation is 14% in Texas where Neutral ATM operates, and much higher on the East and West coasts! In previous blogs we have discussed how raising rates removes cash from the commercial banks, and the Fed looses their collateral (treasury bonds), whenever they are doing reverse repo activities to add liquidity to the credit system. Put simply, the Fed cannot afford to really raise rates at this point. Last year sometime was the best time for that. It’s too late now. The November mid term elections are simply one more reason not to raise rates!
So, we don’t believe rate increases will actually happen. This means inflation will keep running hot! How does the Fed control that? By controlling the velocity of money, in other words, spending! Central bank digital currency (CBDC) would allow spending controls and more surveillance of citizens for central banks. CBDC accounts could be cut off for over spending (hoarding) a good or service in high demand due to the inflation. Here is a chart on how CBDC actually works: