https://advisor.visualcapitalist.com/three-different-types-of-inflation/
These two charts show two different kinds of inflation, one being “Monetary Inflation” and the other “Asset Price Inflation”.
I’ll note that the money supply circulating in the economy is largely determined by the FED, with that being said let’s take a look at the “Monetary Inflation” chart first. I’d argue this chart is a better depiction of what the real inflation number looks like as opposed to the CPI (Aka CP lie) but I digress. Do you see the large green line at the end? YES!!! That’s how much money we printed in the past couple years, absolute insanity I know. Let’s continue.
Now the more important chart “Asset Price Inflation” this chart shows you just how dependent our economy is on asset prices (aka asset bubbles), and why it would be nearly impossible to get positive real interest rates at these current levels.
The FED has stated numerous times they’re number one goal is to tackle inflation and bring it down to 2%. News flash they’re light years away from there target. If they can’t get positive real interest rate guess what? Their only other option would be to lower demand, how do they do that? Lowering your purchase power in other words crashing assets.
Quantitative Tightening is the means at which they’ll accomplish this goal. They’ve already started this month get ready.
I’ll end with a quote “Don’t fight the FED”.
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