CNN: The Fed’s battle to fight inflation could cause more pain than higher prices; JR: Who Will Blink First?



Regular unleaded gasoline is over $5.00 per gallon at two California gas stations I have seen in the past few days. Actually, it was $5.39 per gallon at the first gasoline station I saw when driving to the office today.

While California prices are amongst the highest in the USA, that is high even for California.

Inflation is becoming more and more of a problem.

CNN posted the following:

The Fed’s battle to fight inflation could cause more pain than higher prices

February 16, 2022

Rapidly rising prices have caused economic hardship for millions of Americans. But drastic action to rein in prices could lead to even more pain, including job losses.

Overall prices jumped 7.5% during the last year, according to the January consumer price index reading, the fastest pace in nearly 40 years. The increases have squeezed household budgets for consumers, caused political problems for Joe Biden and resulted in calls for the Federal Reserve to take relatively severe action, such as its first half-percentage-point hike since 2000.

But some economists are cautioning that would be a very bad idea, hurting the people that the battle on rising prices is meant to help.

That’s because the main tool available to the Fed to fight inflation — raising interest rates — is designed to curb inflation by slowing what has been a very strong economy.

Even with the best year of economic growth and job gains in decades, the economy still has 2.5 million fewer jobs than it did heading into the pandemic. So employers need to continue hiring. But a slower economy means fewer job gains, perhaps even job losses for the lowest income segment of the workforce.

“The people you’re drafting into the fight against inflation when you raise interest rates and slow the economy are the most vulnerable,” said Robert Reich, the former US Labor Secretary under President Bill Clinton and a professor of public policy at the University of California, Berkeley. “The purpose of raising interest rates is to take the air out of the sails of the economy. If it works, you are by definition are going to have fewer jobs. Even small increases in interest rates, if they have the desired effect, will cause job losses and wage losses.”

The electronic printing more of money through official USA debt as well as by the Federal Reserve set the stage for inflation.

I well remember inflation back in 1982. To fight it, the Federal Reserve kept raising interest rates.

In that year, my wife and I looked at buying our first house. The Veteran’s Administration interest rate to do so, which was lower than the ‘conventional rate,’ was 17.75%.

We could not afford that and waited before buying a house.

If the US government had to pay something like that rate on its current official debt, the interest payment would be over $5 trillion per year.

The US brings in nearly $4 trillion in revenues.

So, just the interest, and nothing else, would be more than the US government brings in all taxes, etc.

That is not sustainable.

And would be disastrous.

That is part of why the US Federal Reserve cannot do now what it did decades ago.

The fiscal policies of the USA are putting it ‘between a rock and a hard place’ which one day will see the USA crushed.

James Rickards also wrote about inflation and the Fed:

Who Will Blink First? …

Inflation in the U.S. hit a 40-year high of 7.5% in January. That comes on top of another 40-year high of 7.0% the month before. Jay Powell’s vision of “transitory” inflation is now in shreds.

It’s clear that the high inflation we are experiencing now is partly due to the 2021 package of $1.9 trillion in giveaways. If the economy is running close to short-term capacity in terms of labor markets and manufacturing ability and you throw $1.9 trillion at it, inflation is the predictable result.

The 7.5% inflation rate is an overall average calculated by the government based on about 29 main categories of goods, and thousands of individual items inside those categories.

When you look past the average to particular goods, what you see is that the prices of things people buy most often such as meat, eggs, bread, poultry and gasoline are going up at an even faster rate, sometimes 10%, 20% or even 40% (these price hikes are offset by lower prices for tuition, health care and air travel that people consume far less frequently).

This kind of inflation poses an acute dilemma for the Fed. On the one hand, the Fed must tighten monetary policy in order to snuff out inflation. On the other hand, if the Fed tightens more than slightly, there’s a danger they will throw the economy into a recession. Unfortunately, a recession is exactly what will be required to beat this kind of inflation.

The Fed Is No Goldilocks

The Fed is trying to finesse the situation with a Goldilocks approach of not too tight, not too loose, but just right. They will fail at this. The stock market gets a vote.

As the Fed tightens and the economy slows, the market will begin a steep decline in anticipation of a recession. The Fed doesn’t care much about the decline, but they do care if the decline becomes “disorderly.”

That’s hard to define, but drops of 3% or more for three–five days in a week over multiple weeks (similar to what happened in March 2020) definitely meets the definition. That’s coming.

At that point, the Fed will throw in the towel and stop cutting rates. Then the inflation will return. So here are your options (and the Fed’s): more inflation, a stock market crash or recession. 02/14/22

Michael Snyder posted:

February 15, 2022

If you are less than 40 years old, you have never seen inflation like this in the United States.  Despite all the warnings, our politicians in Washington just kept borrowing and spending trillions upon trillions of dollars that we did not have.  And despite all the warnings, the Federal Reserve just kept pumping trillions of fresh dollars into the financial system.  Now we have a giant mess on our hands, and anyone that believes that this is going to be easily fixed is simply being delusional. …

The producer price index has risen at a rate of 9.7 percent over the previous 12 months. …

Truck trailer prices in January 2022 were 29.6 percent higher than they were in January 2021…

According to data released by the U.S. Bureau of Labor Statistics on Thursday, the consumer price index for used cars and trucks jumped up by 40.5% from January 2021 to January 2022. That means within a year, the average price of used cars and trucks for urban consumers has gone up by 40.5%. …

Between January 2021 and January 2022–President Joe Biden’s first year in office–the price of unleaded gasoline increased 40.8 percent, according to the Bureau of Labor Statistics. …

The price of lumber has really been surging once again.  …

And the “geniuses” at the Fed are undoubtedly going to find even more ways to really mess things up.  They are the ones that are more responsible than anyone else for getting us into this mess, and now many Americans are desperately hoping that they can get us out of it.

If you are waiting for them to fix the economy, you are going to be waiting a really, really long time.

As far as the Federal Reserve goes, notice also the following:

February 16, 2022

St. Louis Federal Reserve President James Bullard unwittingly let the cat out of the bag and revealed the central bank doesn’t have the stomach to do what’s necessary to take on surging, persistent inflation.

After January’s CPI data came in even hotter than expected, Bullard shocked markets by calling for a full 1% rate hike by July. …

Bullard appeared on CNBC’s Squawk Box and did damage control. He didn’t back off his call for a 1% hike by this summer, but he did walk back his hawkishness, describing it as “front-loading” the Fed’s planned tightening.

I do think we need to front-load more of our planned removal of accommodation than we would have previously. We’ve been surprised to the upside on inflation. This is a lot of inflation.”

Bullard described his comments as “shading up” his position, and he emphasized he’s just one person on the committee.

Most significantly, Bullard insisted the Fed will continue to provide “accommodative” monetary policy.

We’re only removing accommodation, so it’s still an accommodative policy as we go through these initial rate hikes. They’re rather cheap actually.”

In other words, despite “a lot of inflation,” the Fed’s plan is to continue creating inflation with an accommodative monetary policy. Or to put it another way, the central bank will continue to pour gas on the inflationary fire.

Bullard’s damage control underscores the painful reality the Fed finds itself in. As economist André Marques put it, the Fed is trapped. It doesn’t really have room to raise rates or taper.

The Fed is trapped in its own web. It does not have much room to raise rates without major complications in the financial market and in the economy. Even if it finally delivers on tapering and starts raising rates, it won’t get any further than it did back in the last rate hike (2015–18) and balance sheet shrinking (2017–19) cycles.”

This is why Bullard emphasized the central bank can raise rates to address inflation, but “we can do it in a way that’s organized and not disruptive to markets.”

I have warned for a long time that the Federal Reserve would not try to do what it did back in the 1980s.

While it DOES plan to have interest rate increases, it is not seriously contemplating raising them to levels seen in 1982.

The reality is that USA has been debasing its currency–that is inflationary.

The Federal Reserve knows this, but likes to act like this is okay.

This debasing of the value of currency (called “dross” anciently), which is what the USA has been doing with its debt and quantitative easing policies, is condemned in the Bible.

4 Take away the dross from silver (Proverbs 25:4a).

22 Your silver has become dross, Your wine mixed with water. (Isaiah 1:22)

25 I will turn My hand against you, And thoroughly purge away your dross, And take away all your alloy. (Isaiah 1:25)

18 “Son of man, the house of Israel has become dross to Me; they are all bronze, tin, iron, and lead, in the midst of a furnace; they have become dross from silver. 19 Therefore thus says the Lord God: ‘Because you have all become dross, therefore behold, I will gather you into the midst of Jerusalem. 20 As men gather silver, bronze, iron, lead, and tin into the midst of a furnace, to blow fire on it, to melt it; so I will gather you in My anger and in My fury, and I will leave you there and melt you. 21 Yes, I will gather you and blow on you with the fire of My wrath, and you shall be melted in its midst. 22 As silver is melted in the midst of a furnace, so shall you be melted in its midst; then you shall know that I, the Lord, have poured out My fury on you.’” (Ezekiel 22:18-22)

The Bible warns against using dross and diluting the money supply. Over producing the money supply is a major factor in inflation. All properly trained economists know this. Yet, many modern ‘experts’ have a different view on debt and printing money. The wrong views on economics will lead to economic problems and ultimately the total crash of the dollar of the USA.

National repentance and a willingness solve the debt situation could be done, but will not be.

More inflation, while inevitable, is not the only other way out.

There will be a “sovereign debt” crisis.

Let us also understand that there is a prophecy in Habakkuk, written about 2600 years ago, about debt which is preceded by the following:

2 Then the Lord answered me and said:

Write the vision And make it plain on tablets, That he may run who reads it. (Habakkuk 2:2)

The Bible says that the ‘debt prophecy’ to be revealed later in Habakkuk 2 is so significant that those who read it should run—essentially that they should take steps because the results will be horrific. Many American politicians have not run away from increasing U.S.A. debt—that will be to the nation’s peril.

The Bible warns about something that will happen to a heavily indebted nation. Notice what the Hebrew seer Habakkuk wrote over 2,600 years ago:

3 For the vision is yet for an appointed time; But at the end it will speak, and it will not lie. Though it tarries, wait for it; Because it will surely come, It will not tarry … 5 Indeed, because he transgresses by wine, He is a proud man … 6 “Will not all these take up a proverb against him, And a taunting riddle against him, and say, ‘Woe to him who increases What is not his—how long? And to him who loads himself with many pledges’? 7 Will not your creditors rise up suddenly? Will they not awaken who oppress you? And you will become their booty. 8 Because you have plundered many nations, All the remnant of the people shall plunder you… (Habakkuk 2:2-3,6–8). …

Notice that what is to happen is so bad, that people who read the prophecy should run, when it is time for it to be fulfilled. Since that prophecy is to be fulfilled at the appointed time of the end, it is still for the future, but perhaps not too far distant in the future. No nation has ever been in as much total debt as the U.S.A.

The truth is that the USA is setting itself up for massive inflation, as well as food shortages. Recently, we uploaded the following video:


Food Inflation & the 3rd Horseman of the Apocalypse

The Wall Street Journal, Reuters, UN’s FAO, and others are reporting food price inflation as well as often selected shortages of some food items. Might it get worse? Did Jesus prophesy famines? One analyst stated, “WE haven’t seen anything yet” in regards to rising food prices. Should Christians prepare? What about helping others? Does the ride of the third horseman of the Apocalypse (Revelation 6:5-6) point to a coming time of severe food inflation. Is more food price inflation coming? Dr. Thiel addresses these issues and more in this video.

Here is a link to the video: Food Inflation & the 3rd Horseman of the Apocalypse.

Hyperinflation will hit the USA.

And while we are NOT there yet, its results, including increasing USA debt, will be worse than almost anyone realizes (cf. Habakkuk 2:6-8).

National repentance is needed, but is not expected (Hosea 11:3a, 5b-7)–but you can repent if you respond to God’s calling.

Some items of possibly related interest may include:

Might the U.S.A. Be Gone by 2028? Could the USA be gone by the end of 2028 or earlier? There is a tradition attributed to the Hebrew prophet Elijah that humanity had 6,000 years to live before being replaced by God’s Kingdom. There are scriptures, writings in the Talmud, early Christian teachings that support this. Also, even certain Hindu writings support it. Here is a link to a related video: Is the USA prophesied to be destroyed by 2028? In Spanish: Seran los Estados Unidos Destruidos en el 2028?
Weather Blessings and Sorrows Are weather problems a warning? What should be done? What does the Bible teach about weather? What about floods, droughts, heat, earthquakes, tornadoes, and solar storms? Here is a related YouTube video Does God Use Weather? A related item in the Spanish language would be Bendiciones y maldiciones del clima.
The Bible, Christians, and the Environment How should Christians view the environment? Does the Bible give any clues? What are some of the effects of air, water, and land pollution? Is environmental pollution a factor in autism and death? Do pollutants seem to double the autism risk? What will Jesus do? Here is a link to a related sermon: Christians and the Environment (there is also a YouTube video available titled Air Pollution, Autism, and Prophecy and one titled Will Pollution lead to the End?).
The End of US Dollar Dominance Is the USA losing its economic status? What about the petro-gold-yuan? A related video is also available: US Dollar being challenged by Gold-Petro-Yuan.
Who is the King of the West? Why is there no Final End-Time King of the West in Bible Prophecy? Is the United States the King of the West? Here is a version in the Spanish language: ¿Quién es el Rey del Occidente? ¿Por qué no hay un Rey del Occidente en la profecía del tiempo del fin? A related sermon is also available: The Bible, the USA, and the King of the West.
Who is the King of the North? Is there one? Do biblical and Roman Catholic prophecies for the Great Monarch point to the same leader? Should he be followed? Who will be the King of the North discussed in Daniel 11? Is a nuclear attack prophesied to happen to the English-speaking peoples of the United States, Great Britain, Canada, Australia, and New Zealand? When do the 1335 days, 1290 days, and 1260 days (the time, times, and half a time) of Daniel 12 begin? When does the Bible show that economic collapse will affect the United States? In the Spanish language check out ¿Quién es el Rey del Norte? Here are links to two related videos: The King of the North is Alive: What to Look Out For and The Future King of the North.
USA in Prophecy: The Strongest Fortresses Can you point to scriptures, like Daniel 11:39, that point to the USA in the 21st century? This article does. Two related sermon are available: Identifying the USA and its Destruction in Prophecy and Do these 7 prophesies point to the end of the USA?
When Will the Great Tribulation Begin? 2022, 2023, or 2024? Can the Great Tribulation begin today? What happens before the Great Tribulation in the “beginning of sorrows”? What happens in the Great Tribulation and the Day of the Lord? Is this the time of the Gentiles? When is the earliest that the Great Tribulation can begin? What is the Day of the Lord? Who are the 144,000? Here is a version of the article in the Spanish language: ¿Puede la Gran Tribulación comenzar en el 2020 o 2021? ¿Es el Tiempo de los Gentiles? A related video is: Great Tribulation: 2026 or 2027? A shorter video is: Can the Great Tribulation start in 2022 or 2023? Here is a video in the Spanish language: Es El 2021 el año de La Gran Tribulación o el Grande Reseteo Financiero.
Does God Have a 6,000 Year Plan? What Year Does the 6,000 Years End? Was a 6000 year time allowed for humans to rule followed by a literal thousand year reign of Christ on Earth taught by the early Christians? Does God have 7,000 year plan? What year may the six thousand years of human rule end? When will Jesus return? 2029 or 20xx? There is also a video titled 6000 Years: When will God’s Kingdom Come? Here is a link to the article in Spanish: ¿Tiene Dios un plan de 6,000 años?
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