The latest CPI numbers came out, and it isn’t pretty.  The CPI rose 0.9% in October 2021.  The year-over-year CPI now stands at 6.2%.

If you annualize that monthly rise in the CPI, then we are above 10% annual price inflation.  I’m not saying this is the case yet, but it is important to do the math and point out the obvious.

What’s really obvious is that the Fed’s 2% mandate is a joke.  We blew past that threshold many months ago, even using the government’s own statistics.

We might now be closer to the 1970s than the 2010s in terms of rising prices.  It is not surprising given that the Fed has more than doubled its balance sheet since February 2020.  Perhaps it is a little surprising only because the Fed created a lot of money after the financial crisis hit in 2008, but we never saw this kind of spike in price inflation.

The absurd thing is that the Fed is still creating money out of thin air.  They finally announced a taper at the last meeting, but that only means that they will inflate less than before.

When price inflation is on the verge of double digits, the policy should be to stop creating money, even from a more conventional standpoint.  Will the Fed finally stop its quantitative easing, or whatever it’s called now, when price inflation hits 15%?

There is a chance the Fed could lose some control.  This is more than just government statistics.  I think most people see the rise in prices when going to the grocery store.  If you are shopping for a car or a house, then you can really see the rise in prices.

All price inflation will impact different people to varying degrees.  Some people are on a fixed income, which can be especially painful.  Some people are in the market for a house or a car, which is a major expense.  It’s one thing to pay 10% more for a dozen eggs.  It is another thing to pay 10% more for a house or car.  Of course, the prices for houses and cars have gone up much more than 10%.

So we are entering something resembling the 1970s, except we have a senile idiot in the White House surrounded by a bunch of people intent on destroying civilization.  Meanwhile, the head of the Fed – probably soon to be replaced by someone even worse – is a Keynesian hack who sees no problem with continuing the inflation.

At this point, I would take a Jimmy Carter.  I would certainly take a Paul Volcker as head of the Fed.

I don’t know how much these people just don’t know what they’re doing versus how much they are trying to cause chaos.

I don’t think the Fed actually wants total chaos.  They don’t want to lose control of the dollar, or else it could ruin their own control.  I believe they think they can pull back at any time and save the dollar, just as was done by Paul Volcker.

Maybe they are right, but it is a high-stakes risk.  And even if they can save the dollar by slamming on the monetary brakes, the recession that follows will be one for the ages.

Almost everything is in a bubble right now except for gold and other precious metals.  I expect we will eventually have a reversion to the mean.

This means that either gold will go up a lot or everything else is going to fall hard.  It could be some combination of the two.