And You Wonder Why Bitcoin and Gold are at Record Highs

Inflation never actually stopped climbing. Eight months ago the decline halted and multiple mechanisms are now pushing prices higher again. Corporations are raising prices freely. Wages are climbing past 4%. Rents are accelerating. Yet the institutions tasked with fighting inflation are behaving as if the war is won. Something has to give.

• The inflation decline stopped eight months ago without anyone noticing. Corporations are passing through price increases while keeping profit margins intact. Wages are growing faster than 4% annually.

• The mechanisms pushing prices higher are massive and real. Fiscal spending is flooding the economy through infrastructure bills and pandemic relief programs. Rents are climbing month-over-month again.

• The gap between the data and the official story is enormous. Everyone looking at the same charts sees the same trend reversal. The gap persists anyway.

• The institutions supposed to manage this outcome have reversed course. Jobs are being added. Prices are rising. Growth numbers are staying strong. This is the outcome some people want.

• The strategy depends on nominal growth staying positive through November and beyond. What happens after that, after the election and after the artificial stimulus ends, is the question nobody is answering.