Inflation Isn’t Caused By A Greedy Ebenezer Scrooge Character

“The world shut your mouth.”

I was thinking of Julian Cope’s 1987 Magnum Opus when I watched the markets yesterday afternoon and this morning.

Bond markets have been in a complete trap since the FOMC statement and the simultaneous release of the infamous Dot plot.

The world, especially the FinTV world, should really shut up and address the real issue here. Inflation is the elephant in the room. So how do you stop it? Are we going back to wearing the WIN (Whip Inflation Now) lapel buttons of the Ford era?

No. FOMC members and their other central bank cronies around the world are so extraordinarily reckless that all they can come up with is an arrogant plan to send the western world into a recession by killing demand for anything that requires financing in making this financing more expensive.

Similarly, Dr. Powell would probably recommend curing a sprained ankle by amputating the leg. No, no, no, a thousand times no!

The problem with Western economies isn’t too much demand, it’s too little supply. This that’s what makes the prices go up! How can these rubes not see that? It would drive me crazy… if I didn’t constantly bet against the Confederation of Dunces by shorting Big Tech and going long on Big Energy. It feels good, I can’t lie.

Above all, the West to have to lower energy prices by achieving self-sufficiency in hydrocarbon production. Did you think relying on Putin for natural gas was great public policy, Ms. Merkel? No, it really wasn’t, because Putin is the Hitler of his generation. Not a reliable guy, to say the least.

Add to that the extraordinary delirium of climate change proponents and their financial cronies, the ESG crowd. How is this investment in the ARK Innovation ETF (ARKK) treating you these days? Oy vey.

But, again, these dual forces have come together to create a world in which hydrocarbons are scarce, which makes the price of everything otherwise go up.

You want to eat? What do you think is the main component of fertilizer production? Natural gas, baby. Want to watch a movie on your iPhone? How do you think the iPhone got from Apple’s manufacturing plant (AAPL) in China to the west coast of the United States, probably the port of Long Beach? It was filled with hundreds of thousands of similar SKUs on a container ship powered by…you guessed it…hydrocarbons, probably fuel oil, which is basically a thicker version of diesel.

I’m going to stop making free examples, because you get the point. Inflation isn’t caused by a greedy Ebenezer Scrooge-like figure raising the price of lettuce so he can skim off your hard-earned dollars. Inflation is caused by pressure in the supply chain, and rising hydrocarbon prices are the main source of this pressure. Oil and natural gas feed the worldand when supply is insufficient to meet demand, basic economics tells us that prices will rise.

Thoughtless fools like Powell may try to “hit the sweet spot” and “thread the needle” to create a “soft landing” or whatever the stupid FinTV commentators call it. It does not work!

Oil hit $140 a barrel in July 2008, and we all remember what happened next. WTI Crude is “only” quoted at $84 a barrel today, so please understand that the problem may – as it did this summer – get worse.

You can either mine it through hydrocarbon-based wallets like my HOAX Complex (the free version is here) or you can hope against hope that Cathie Wood somehow finds her groove. Ugh.

Prior to his solo career, Julian Cope was the frontman of The Teardrop Explodes. The economy of the western world is now exploding. The bond market was, as always, the first to know. Please don’t be the last.

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