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POWELL IS EITHER DEAD WRONG OR A GENIUS!

Contributing Author
April 6th, 2021
Portfolio Wealth Global
Comments (7)

This article was contributed by Portfolio Wealth Global. 

For months now, the theme has been that the economy is heating up.

If you free-search the term “Overheated Economy,” tons of articles, showing packed malls and fully-booked resorts appear.

The notion that bond yields are going to keep rising and that the FED must tighten soon is flawed in the eyes of FED Chair Powell.

If he’s wrong, the gloom-and-doom crowd believes inflation will get out of hand.

I want to show you Powell’s arguments that inflation will not rise above the 2.2%-2.4%, where the FED wants it to be for the next few years, and then I’ll show you where Powell could be wrong.

WHY DISINFLATION IS LIKELY

Disinflation doesn’t mean deflation. It means that inflationary expectations aren’t met.

It means that deficit spending and unsecured government debts are not going to cause a worst-case scenario, despite the in-your-face emotional rants of people who despise them.

Here’s why Powell believes disinflation (2.2%-2.4% long term) is more likely:

  1. Supply Chain Congestion: This is a big one. His reply is that any supply chain matters are fleeting and will be resolved. I agree. The capacity to manufacture in today’s world is nearly inexhaustible.
  2. Technological Boom: A crucial point is that breakthroughs in technology are making our lives much more affordable.

If I think about twenty years ago when people wanted to chat with a friend of theirs, while riding the bus, the SMS technology was expensive!

A text message used to cost a fortune. If I tried to live the same life I did twenty years ago, my life would be 50% cheaper than it is right now, so technology is driving prices down.

  1. Mature Economy: No robust economy with a long-standing currency system has ever suffered from crazy inflation.

It is true that all fiat currencies in history have gone to zero, but it’s also misleading since the population had ample time to exchange the old currency for the new one before the old expired into nothingness.

  1. Competitive Global Economy: In the 1970s, America was the clear dominator and no one else was even close. Today, the ability to produce and manufacture is uncanny and before companies raise prices, there better be a very good reason for it.
  2. Phillips Curve Theory Failed: In the last few years, we saw unemployment levels in the U.S. go down so much, yet inflation never became an issue. The jobs market was so tight that people were quitting left and right and companies still didn’t raise wages by that much, since they looked outside the U.S. for talent.

Courtesy: Zerohedge.com

Bonds have clearly been a horrible asset to hold in 2021, but with the 10-year bond dishing out 1.714%, as I write this, get inside the head of a pension fund manager, with billions to deploy and a mandate that he must hold government bonds.

He looks at the available supply of bonds and sees that in Europe, every government will borrow from you, but none of them will pay anywhere near what Washington will and some might even charge you interest!

Inflation might not become a pressing issue, so don’t bank your livelihood on hyperinflation.

Instead, take baby steps and do what’s right for you today, with the available information at your disposal, not with some theory that 51 years after we’ve gone on the fiat currency system, suddenly everyone will treat it like a house of cards.

It might not happen…

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    Author: Contributing Author
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    Date: April 6th, 2021
    Website: https://www.portfoliowealthglobal.com/

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    7 Comments...

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    1. Andrea.Iravani. says:

      Hey Teacher, Leave Them Kid’s Alone! – Pink Floyd

      What ever happened to article VI of the constitution that states that no religious test shall ever be required as a qualification to any office or public trust under the United States? AIPAC is forcing teachers and schools to dictate on specific terms what is essential for students to know and what is not. This is totally unconstitutional on both violations of article VI and the 1st amendment that state in part that congress shall make no establishment of religion or prohibit the free exercise thereof. 

      https://www.unz.com/estriker/the-department-of-justice-and-adl-call-on-supreme-court-to-rule-that-students-do-not-have-right-to-free-speech-off-campus/

      The school does not have any authority to punish any behavior that does not occur in school. 

      This may come as a total shock to schools and teachers, but you do not own the students as your personal slaves, nor do you have the authority to reign over their off campus lives in total tyranny. You do not have to like what your students say or do. This may also come as a total shock to you, but students do not exist to please or accomodate you, in fact, you as teachers exist to please and accomodate students. That is the job that you signed up for when you decided to become a teacher, in addition to teaching of course! You are not even capable of monitoring or controlling students behavior right in the class room, now you want to extend your scope of reach to off campus activity when you cannot even effectively control students behavior in the class room? It is time for you to do a reality check!

      Andrea Iravani

    2. Darth Skippy says:

      Creationists believe the Earth was warped through catastrophic forces, and may end, at any time, according the doctrine of imminency.

      But, elitists live in a perfect state of emotional security.

      afaic, productive countries, factories, mines, machines, and workers can be retired, for no particular reason, whether that is to cover some fake, legal fee, or to maintain their perpetual balancing act between hoarding and waste.

      The power to balance is still absolute tyranny.

    3. cranerigger says:

      Do we really believe that irrational exuberance can continue with no repercussions? Do we believe our currency can metaphorically be printed into oblivion with no consequences? Does this banking & stock market centric model (MMT) have no limits?

      Sure, lots of folks are heavily invested in the status quo, but I suggest there is a problem with SUSTAINABILITY.

    4. Andrea.Iravani. says:

      Gaetz should resign. Gaetz asserts that the allegations of traficking a seventeen year old across state lines are false. Even if those allegations do hapoen to be false, ( which I am suspicious of )  the fact that Gaetz corrupted the Florida State legislature in an immature sex game that objectifies women is proof that Gaetz is unfit to hold public office. Gaetz was not satisfied in his own sexual conquests. He had to try to drag everyonevelse down to his level. It is outrageous that this is taking place. It is offensive as hell. To claim that you are not a monk is just another display of your peurile, brazen, callous lack of contrition. You really do not see anything wrong with your grossly offensive, unprofessional, and inappropriate behavior. It is truly disgusting to sit hear and watch you attempt to justify your total lack of judgement in all of this. Just go away!  America has enough problems as it is!  You are only making things worse! All of the members involved in this high-school game of objectifying women should resign! 

      https://sputniknews.com/us/202104031082526497-matt-gaetz-played-harry-potter-inspired-sex-competition-game-with-florida-lawmakers-report-claims/

      https://sputniknews.com/us/202104061082555312-not-a-monk-certainly-not-a-criminal-gaetz-wont-resign-slams-biden-doj-for-false-sex-claims/

      Andrea Iravani

    5. I’m not a money manager like this “contributing author”, but I wouldn’t invest my money with him. He says it costs 50% more to live his lifestyle today than it did 20 years ago, then attributes that to technology.

      If he’s a money manager he should have heard of the Rule of 72. Applying the Rule of 72 at 2% (the low end of his inflation assumption) you get a doubling in 36 years. This means a 50% increase occurs at 18 years…or 2 years less than his scenario. So just pure inflation caused the increase, not technology.

      • Darth Skippy says:

        The whole intention, in the first place, was to prevent against booms and busts, in the short term.

        Since they penalize other sectors, or fund liquidity in bonds, maybe, he thinks it’s not “pure” inflation.

        Part of peoples’ incredulity is thinking it’s comes out of the blue.

        I think, the way money acts, is akin to matter and energy, which is never conventionally created nor destroyed, just takes on different forms.

    6. Money can take on different forms, such as credit, or currency, but it is all created at the point of the loan. It is a debt based system. It is entries in a bank ledger… an entry on the bank side as an asset and an entry on the borrower side as a liability. It can also be created as credit on a card (same ledger entries).

      Where it all goes awry is when interest is added to the credit, or mortgage, or loan. Say you take a $500,000 30 year mortgage out with a 3.75 % interest rate. You would pay over $333,000 in interest over the life of the mortgage. Where does this interest come from? The borrower must get it from someone else who has borrowed it into existence in order to pay it back. He can get it by working, but it still was borrowed into existence.

      So the whole M2 money supply (debt supply) must constantly grow in order to pay the banker usury. It is why the debt of the world constantly grows. Notice how the Fed has stopped updating the M2 chart (it was looking like a hockey stick). M2 will never shrink until there are too few resources left to back up the rolling debt. Then, it means worldwide collapse.

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