Roundtable Discussion: Inflation Signs

(Inflation Part 3)

Future of Gas Prices? (drove by this sign today)

Just today, the wholesale Producer Price Index rose by 9.6% on an annual basis. That’s the highest increase since the index began in 2010. This index can be a leading indicator for future Consumer Price Index increases, which itself went up to 6.8% last month, which was the highest in 39 years.

Yet, 10 year market assumed inflation (10Yr Bond – 10 year TIPS) remains more subdued at 2.37% as of today (but up considerably from 2 years ago). This is why the Fed isn’t panicking yet.

What is one of the biggest signs of long-term or “non-transitory” inflation? Housing. Shelter.Rents. November housing (Shelter) CPI was at 4% YOY and climbing. Why? Because the pandemic drove people – especially the next generation – to purchase homes. And many of those (over half) were Millennials purchasing homes with record sized mortgage debt at historically low interest rates. And the housing market went through the roof. But that in turn has driven up mortgage payments which has driven up rents.

As of 2Q 2021, MBS outstanding is $11.7 Tn and climbing

Greed is a huge factor too, 2/3 of publicly traded companies are reporting fatter profit margins than pre-CV19 because they can get away with (people are willing to accept) once in a lifetime price increases. This is like eating ourselves for breakfast. It was also a big factor in the 70s. Once people are psychologically willing to accept and pay higher prices, it can become a downward spiral – one person raising prices because they paid more themselves. One’s perceived loss can be made up by charging someone else more. That too is greed.

In July 2020, recall we discussed the Inflation Prophecies where several modern day prophets have given prophecies of inflation, including John Paul Jackson and Bob Jones. Then in March 2021, as part of the National Debt discussion, we delved into the “what if” the US lost its place as the reserve and settlement currency of the world? And how that could lead to hyper-inflation. In May, we discussed Inflation again, and how the Storehouse Vision was designed to address the issue of inflation using “Break-Away Bridges”…

Yes, we need to come out of Babylon. We will further explore and brainstorm together how the Storehouse and local asset-backed currencies can potentially mitigate future inflation in tomorrow’s discussion. Land, food, water are all part of the potential solution.