Biden Admin Backtracks on Inflation

Written by Jason Simpkins
Posted September 10, 2021

For months, President Biden, White House advisors, and the Federal Reserve have been insisting that inflation isn't a thing — that price increases have been confined to select sectors, that they can all be traced back to supply-chain disruptions, and that they're only just temporary.

So don't worry about it.

I'm sure you've heard all of these talking points because they've been super vocal about them.

And that's why I was surprised that last Friday, as we all took off for the long Labor Day weekend, the White House sheepishly announced a stunning reversal.

Indeed, the Office of Management and Budget more than doubled its forecast for annual inflation. It now expects consumer prices will rise 4.8% in the fourth quarter, up sharply from the 2% rise that the Biden administration forecast in May.

That the Biden administration had forecast just a 2% price increase just four months ago really goes to show just how inaccurate these estimates are.

They're completely divorced from reality.

And that's not just me speaking in hindsight. I said as much at the time.

In fact, I've been drawing attention to this dichotomy since June 2020, pointing out in real time that the government's data was wrong.

"The government is wrong," I wrote. "In short, the cost of food and basic necessities, and prices in general are actually rising — not contracting."

And that was just the beginning. I've spent most of 2021 further amplifying that very point.

So this really shouldn't be a surprise.

What's really frustrating, though, is that a lot of these policymakers still can't even bring themselves to admit they were wrong.

“We think this trajectory is very much consistent with the inflation outlook we’ve been discussing pretty much since we got here,” one Biden official said on a call with reporters.

How do you do that?

How do you double your forecast for something and say it's consistent with what you previously projected?

It's only because at this point they're in too deep.

They've spent so much time downplaying the inflation that we've all seen with our own eyes...

So much time talking about supply-chain disruptions...

So much time insisting that it's all just temporary...

That if they go back now they'll look incompetent.

That's why their last best hope now is that the Fed will bail them out.

But that's hardly a sure thing because as you've seen, the FOMC has been just as stubborn as the White House on this subject.

That's why the "tapering" talk we've been hearing these past few months is premature.

As I said in June, the "announcement of a decision to actually taper would be several months later — this fall at the absolute earliest. And that announcement would only signal the beginning of the asset reduction further out in late 2021, or more likely sometime in 2022."

Some thought the Fed would make that announcement at its meeting this month (September 21–22). That would be just inside the window I predicted but I still don't think it's likely. I think October or even November is far more likely, again with the gradual wind-down itself beginning in December or early next year.

Of course, even if that happens, there's no guarantee that prices will cool down in any substantial manner — not with rate hikes so much further down the road.

No, inflation will continue to be a persistent problem. And the government will continue to lie about it.

It's all part of the ruse that's been going on for the past 50 years.

The reality is simply that if inflation were accurately measured and truthfully acknowledged, it would undermine confidence in fiat currency itself.

It would expose the government's scheme to inflate away its $35 trillion in debt.

That's why this charade is going to go on... and on... and on...

And it's why I encourage investors to explore every possible avenue of wealth preservation, from gold to crypto. 

I even put out a special report on the subject that you can learn about here.

Fight on,

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Jason Simpkins

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Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of Wall Street's Proving Ground, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's page. 

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