Biden and Trudeau pretend inflation is going to ease
But the evidence is clear that inflation will keep rising until leaders get it right
North American liberal leadership under Biden and Trudeau downplay inflation as if it were a temporary aberration likely to correct itself without extreme intervention by central banks or other government policies. Biden even suggests that higher taxes will quell inflation. Where did these leaders get their education in economics? Maybe Trump university?
Inflation is rampant. Here is a chart from McKinsey & Company, Inc. showing that food prices are at a record high.
Biden’s proposal for higher corporate taxes is a charade. Corporations don’t pay taxes, they collect them and pass on any increased costs to their customers. Higher corporate taxes are a stealth tax on the poorest in society.
Globally, wages have fallen far behind the inflation rate (another McKinsey chart).
Inflation is not confined to food. Housing has become unaffordable pretty well everywhere, a legacy of foolish Democrat and Liberal party policies that promoted near zero interest rates for decades driving up real estate prices. Now as rates rise to combat inflation, mortgage rates are rising and homes are unaffordable (again, a McKinsey chart). It seems to me that food and housing are pretty basic needs.
Inflation is not transitory, but is entrenched. Years of over-regulation of the mining and energy industry have created severe shortages of key metals and a global energy crisis. Inflation is now evident in many commodities (another McKinsey chart).
Central banks everywhere are raising rates to try and fight off inflation. From where I sit, it looks like too little and too late. (Once again, I am indebted to McKinsey for this chart)
Buckle up. The economy is going to get nasty pretty well everywhere and the only survivors will be those with the common sense to invest in energy and mines where the global shortages are forcing prices higher and investors are reaping the benefits. Unless and until leaders address the growing global energy shortage by expanding fossil fuel output (and abandoning the nonsensical view that wind and solar can replace fossil fuels or the even more nonsensical view that CO2 causes climate change) the imbedded inflation will get worse until the economy virtually collapses. When it does, it will cause serious damage to the poorest in society. As the eventual economic decline plays out and the economy begins to expand again, energy and metals will once again be the beneficiaries since recessions do not see much capital go into expanded supply of these key economic inputs. The likely chaos in the real estate market will see prices slump for a year or two, but real estate will benefit over the longer run from the devaluation of money since the utility of a home is unimpaired by economic downturns
The leaders will never get it right - consider that they are intentionally doing this to destroy the economy. The so called leaders are consistent in poor policy decisions, so this is intentional imo.
Michael - Was thinking you might enjoy The End of the World Is Just the Beginning: Mapping the Collapse of Globalization by Peter Zeihan. I'm about halfway through and his hypothesis is that we're facing some pretty profound changes over the next little while as a result of demographic and geopolitical factors that are baked in the cake.