Is Another Biden Price Hike Coming?

Last week’s inflation numbers were pretty… well, bad to say the least. 

The Tylers over at ZeroHedge didn’t hold back…

Inflation is a topic I’ve been writing you about since last year (before it officially became a “thing”). For the last six months, it’s about all anyone can talk about. 

The latest numbers were particularly unsettling for a couple reasons…

First, headline CPI for September was up 0.4% since August and is still stuck over 8% (8.2% to be exact) year over year.

Second, and even more disturbing, core CPI (the measure that excludes food and energy prices) rose 0.6% to a new 20-plus year-over-year high at 6.6%. I say more disturbing because when this number exceeds the headline number it indicates that inflation is spreading into everything. (But you likely already know that.)

Even the “core core” measure I mentioned a couple weeks back (and I’m still not sure is a real thing) came in at 6.4%. (If it’s auditioning for a spot in the BLS’ reporting line up, it’s failing miserably.)

Really not much of a silver lining anywhere to be found.

Bad News for Everyone

It’s bad news for any consumers who aren’t rich enough to say “price is no object” (which includes most families these days).

It’s also bad news for the Fed — because their entire credibility is on the line in this mess.

To salvage that cred, they’ve gone on a rate hiking binge the market hasn’t seen since the late 1980s. (Ultimately they won’t be successful. I’ve said it before, the Fed simply doesn’t have the tools, much less the ability, to fix this kind of supply-driven inflation.)

But it’s really, really bad news for the Biden administration and Democrats up for election this November. “It’s the economy, stupid” has long been the key when it comes to elections. And this economy isn’t going to win any votes.

So why do they keep screwing things up?

The People Behind These Inflationary Forces Can’t Help Themselves…

I’ve written about how the Fed’s monetary policy battle is completely at odds with the government’s expansive fiscal policies. Well, inflationary forces are extending well beyond that.

The government can’t seem to help itself when it comes to breaking things that cause inflation. Check out the latest round of sanctions being considered on Vladimir Putin…

The Biden administration is considering a complete ban on Russian aluminum — long shielded from sanctions due to its importance in everything from automobiles and skyscrapers to iPhones — in response to Russia’s military escalation in Ukraine.

The White House is eyeing three options: an outright ban, increasing tariffs to levels so punitive they would impose an effective ban, or sanctioning the company that produces the nation’s metal, United Co. Rusal International PJSC, according to people familiar with the decision-making.

Thus far, sanctions on Russia have largely hurt global markets more than they’ve put a crimp in the Russian powers that be.

Banning aluminum now would have more wide-reaching implications for global markets.  Not only would it push the price of the metal higher, but it would break yet another supply chain as manufacturers around the world scramble to replace their sources.

Continually damaging supply chains does no good when you’re dealing with supply-driven inflation. Yet the administration seems to take no notice. And the consequences won’t be good.

Like I reminded you a few weeks back, supply-driven inflation can be really sticky… 

Back through the 70s and early 80s, inflation hit peaks of 12% and 15%. Over the course of the entire decade between 1973 and 1983 inflation averaged 9% every year!

These higher prices the West is geopolitically engineering, are likely to be with us for a while.

Make the trend your friend,

Bob Byrne
Editor, Streetlight Daily