“Socialism destroys everywhere one thing — diversity. Everything is supposed to be best, and as we know, best things are always in shortage.”
– Janusz Korwin-Mikke
“The story of U.S. inflation in 2021 could very well amount to this: It’s all a mirage.”
That’s from a December 2020 Bloomberg article— predicting that the consumer price index (CPI) would be a little volatile at the start of 2021 but settle down by the end of the year.
The Federal Reserve, too, didn’t expect prices to move very much. The Federal Open Market Committee released its Summary of Economic Projections on Dec. 16, 2020. The Fed’s bank presidents and board members were looking for personal consumption expenditures (PCE) — a cousin of CPI — to come in between 1.5% to 2.3% for the year.
Never mind the fact that CPI and PCE are terrible inflation gauges. In December 2021, the U.S. CPI was 6.8% higher from last year… and the most recent PCE reading shows a 5.7% gain — the highest increases for both since 1982.
This really should have been a no-brainer, though, right?
The Federal Reserve was pumping trillions of dollars into the economy. Problems in the supply chain are causing shortages in everything from computer chips to cream cheese. It’s too much money chasing too few goods… a classic definition of inflation.
Our team, of course, was right on the ball. (Yeah, yeah, think what you will.)
Back in January 2021, our income strategist Zach Scheidt told you how to earn instant cash from the supply chain woes. And in March, an issue of Jim Rickards’ Strategic Intelligence looked at “Surviving the Coming Inflationary Wave of Our Lifetime.”
Given how badly policymakers and mainstream forecasters blew it last year, it’s little surprise that they are warning there will be more inflation in 2022.
We told you how the Fed stopped describing inflation as “transitory” a few weeks back. The Economist’s forecast report lists “inflation worries” as one of the top trends to watch for over the next 12 months. A recent Bloomberg headline admits “inflation is clouding the picture for 2022”… essentially admitting that higher prices are not some temporary mirage.
Jim and Zach don’t disagree.
The most recent Strategic Intelligence issue dives into why supply chain woes will continue for years. “Reconfiguring the meta supply chain will take five to ten years to accomplish,” Jim writes. “Investors should expect empty shelves, higher costs and slower growth in companies most affected by the breakdown.”
Based on Jim’s analysis, Dan Amoss recommends buying shares of an oil and gas company that is in a prime position to take advantage of supply chain problems. “It has the potential to return 50-100% by late 2022,” Dan writes.
Zach has been looking for ways to profit from supply problems and inflation, too. During the Six Predictions Summit he discussed the “Everything Shortage.”
“There really is a shortage of just about everything to live our daily lives,” he said. But “there are ways that you can actually profit from this shortage.” His talk centered on the shortage of workers… which is why he recommended shares of a U.S. staffing company.
Then in a December Lifetime Income Report alert, Zach connects the “everything shortage” to “everything inflation.” He warns that “prices will continue to rise as long as this imbalance is in place.”
So you’ll need to work harder to ensure your “income is rising faster than inflation.” His next issue will have a specific recommendation to help you do just that. Expect it online soon.
Follow your bliss,
Founder, The Financial Reserve