Tag Archives: Inflation

Is The U.S. Going To Transition From Stagflation Directly Into A Full-Blown Economic Depression?

By Michael Snyder

Should the fact that the U.S. economy actually contracted during the first quarter actually surprise any of us?  Since the start of 2022, there has been crisis after crisis, and now the war in Ukraine is depressing economic activity all over the planet.  What we are facing could most definitely be described as a “perfect storm”, and the truth is that this storm isn’t going to go away anytime soon.  But where do we go from here?  Will the U.S. economy bounce back, or will this new economic downturn soon become even worse?  Most economic optimists are assuming that the former will be true, while many economic realists are issuing dire warnings about what is ahead.

I was actually thinking of writing about something else today, but I knew that my regular readers would want me to talk about this

Gross domestic product unexpectedly declined at a 1.4% annualized pace in the first quarter, marking an abrupt reversal for an economy coming off its best performance since 1984, the Commerce Department reported Thursday.

The negative growth rate missed even the subdued Dow Jones estimate of a 1% gain for the quarter, but the initial estimate for Q1 was the worst since the pandemic-induced recession in 2020.

We already knew that inflation had started to spiral out of control in the United States, and now the “stag” part of “stagflation” has arrived.

So what caused this “sudden” downturn?  According to CNN, there are quite a few factors that can be blamed…

A push by the Federal Reserve to raise interest rates and combat high inflation. Supply chain shortages. An ongoing global health crisis. And of course, the geopolitical earthquake caused by Russia’s invasion of Ukraine, which is also threatening to create a world food crisis.

If the U.S. economy shrinks again in the second quarter, that will officially meet the definition of a “recession”.

But as John Williams of shadowstats.com has pointed out, if honest numbers were being used the U.S. economy would still be in a recession that started all the way back at the beginning of the COVID pandemic.

Everybody pretty much realizes that economic conditions are not great right now.

So are brighter days just around the corner?  That is what some pundits seem to think

The US economy will return to growth during the second quarter, according to RSM chief economist Joe Brusuelas. “Without a doubt,” he said.

“This is noise; not signal,” Pantheon Macroeconomics chief economist Ian Shepherdson wrote in a report. “The economy is not falling into recession.”

Maybe they will be right.

But if the economy is so strong, then why are foreclosure filings absolutely soaring?

Last month, 33,333 properties across the U.S. faced foreclosure, a 181 percent jump from March 2021 and 29 percent pop from February, according to a report by foreclosure tracker Attom. The first quarter saw 78,271 properties with a foreclosure filing, a 39 percent from the previous quarter and 132 percent from last year.

Needless to say, there are other experts that have a much more negative view on what is ahead.

For example, Nancy Lazar is warning of a “synchronized” global recession…

Piper Sandler chief global economist Nancy Lazar warned on Monday that the world is in the early stages of a “very significant” and “synchronized” recession.

In an appearance on “Mornings with Maria” Monday, Lazar noted that a recession is expected outside of the United States.

“It’s going to be a global recession pulling down [the] Euro zone in particular,” she told host Maria Bartiromo. “It looks like China GDP [Gross domestic product] in the second quarter could also be negative.”

Actually, if all we suffer is a significant global recession that will be really good news.

Because right at this moment inflation is dramatically spiking all over the globe, we are witnessing the largest land war in Europe since World War II, and the UN is telling us that we are heading into a horrific worldwide food crisis.

An increasing number of Americans are starting to realize that things are moving in the wrong direction.  In Gallup’s April survey, only 18 percent of Americans rated economic conditions as “good”, and only 2 percent rated them as “excellent”…

The GDP news comes on the heels of newly released polling data from Gallup that suggested that economy confidence is extremely low among the American public.

More than four in ten (42%) of Americans said that economic conditions in America were “poor,” while another 38% said that they were only “fair” in Gallup’s April survey. Just 2% said economic conditions were “excellent,” while 18% said they were “good.”

Those are terrible numbers, and they have very serious implications for the Democrats in the fall.

But instead of focusing on fixing the economy, Joe Biden wants Congress to give him another 33 billion dollars for the war in Ukraine…

President Joe Biden is asking Congress for another $33 billion to help Ukraine resist Russia’s invasion and provide humanitarian aid to the Ukrainian people.

The proposal, which the White House will send to lawmakers on Thursday, includes $20 billion in additional security and military assistance for Ukraine, another $8 billion for economic assistance and $3 billion in humanitarian aid.

This is complete and utter madness.

To put this in perspective, the military budget for Ukraine is normally about 6 billion dollars for an entire year.

And much of the equipment that the U.S. is sending to Ukraine is being blown up by the Russians before it can even get to the fighters on the frontlines.

With each passing day it is becoming clearer to everyone that this conflict is really a proxy war between the United States and Russia.

And nuclear war is increasingly becoming one of the hottest topics on Russian television.  For example, the following is a recent exchange between two Russian television personalities that is making headlines all over the globe…

“Everything will end with a nuclear strike is more probable than the other outcome,” she continued. “This is to my horror, on one hand, but on the other hand, with the understanding that it is what it is.”

It was at that point Solovyov chimed in, “But we will go to heaven, while they will simply croak.”

“We’re all going to die someday,” Simonyan agreed.

“We’re all going to die someday”?

I certainly don’t like the sound of that.

Unfortunately, many Russians are now entirely convinced that nuclear war is coming.

But instead of pushing for peace, Joe Biden and his minions just keep escalating the conflict.

If we continue to go down this path, it will end in a nightmare.

Our current economic problems pale in comparison to the possibility of a nuclear conflict, but most Americans still don’t understand the implications of the decisions that our leaders are making.

Because if they did understand, there would be giant protests in the streets of every single major U.S. city right now.

What Is Going On? Union Pacific Railroad Begins Restricting Rail Shipments of Nitrogen Based Fertilizer During Spring Planting Season

Jim Hoft
April 18, 2022 

In early March, Tucker Carlson invited Iowa Corn and soybean farmer Ben Riensche on his top-rated program to discuss the massive inflation we are about to see in food prices here at home.

According to Rienshe, grocery prices may increase up to $1,000 per month due to Russia’s sanctions on fertilizer.

Transcript via Real Clear Politics.

“It’s embarrassing how little most people know about fertilizer, what it means, tell us the implications of this sanction?” Carlson asked.

“Soaring fertilizer prices are likely to spike food prices,” Riensche said. “If you’re upset that gas is up a dollar or two a gallon, wait until your grocery bill is up $1000 a month. And it may not manifest itself in terms of price, it could be quantity as well. Empty shelf syndrome must just be starting.”

“I’m sorry, I just wanted to make sure I heard you correctly. Up $1000 a month?” an incredulous Carlson asked.

“Sure,” Riensche responded. “The price of growing my crops, or the major crops, corn, soybeans, wheat, rice, cotton are up 30 to 40%. They are on my farm. And most of it is fertilizer. Nitrogen prices are up 3 times from the left crop we put in. Phosphorous and potassium have doubled.”

That was in March.

Now this…
A leading manufacturer of hydrogen and nitrogen products was informed Union Pacific rail lines were reducing and limiting shipments of fertilizer during the planting season this year.

Who made this decision?

CF Industries reported:

CF Industries Holdings, Inc. (NYSE: CF), a leading global manufacturer of hydrogen and nitrogen products, today informed customers it serves by Union Pacific rail lines that railroad-mandated shipping reductions would result in nitrogen fertilizer shipment delays during the spring application season and that it would be unable to accept new rail sales involving Union Pacific for the foreseeable future. The Company understands that it is one of only 30 companies to face these restrictions.

CF Industries ships to customers via Union Pacific rail lines primarily from its Donaldsonville Complex in Louisiana and its Port Neal Complex in Iowa. The rail lines serve key agricultural areas such as Iowa, Illinois, Kansas, Nebraska, Texas and California. Products that will be affected include nitrogen fertilizers such as urea and urea ammonium nitrate (UAN) as well as diesel exhaust fluid (DEF), an emissions control product required for diesel trucks. CF Industries is the largest producer of urea, UAN and DEF in North America, and its Donaldsonville Complex is the largest single production facility for the products in North America.

“The timing of this action by Union Pacific could not come at a worse time for farmers,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “Not only will fertilizer be delayed by these shipping restrictions, but additional fertilizer needed to complete spring applications may be unable to reach farmers at all. By placing this arbitrary restriction on just a handful of shippers, Union Pacific is jeopardizing farmers’ harvests and increasing the cost of food for consumers.”

On Friday, April 8, 2022, Union Pacific informed CF Industries without advance notice that it was mandating certain shippers to reduce the volume of private cars on its railroad effective immediately. The Company was told to reduce its shipments by nearly 20%. CF Industries believes it will still be able to fulfill delivery of product already contracted for rail shipment to Union Pacific destinations, albeit with likely delays. However, because Union Pacific has told the Company that noncompliance will result in the embargo of its facilities by the railroad, CF Industries may not have available shipping capacity to take new rail orders involving Union Pacific rail lines to meet late season demand for fertilizer.

More here.

BlackRock’s Fink Says Invasion of Ukraine “Accelerates” ESG and Digital Currencies Shift

BlackRock CEO Larry Fink’s annual letter to shareholders has become heavily scrutinized as ones from Berkshire Hathaway chief Warren Buffett and JP Morgan chief Jamie Dimon. Fink is the boss of a $10 trillion asset manager, the world’s largest, and oversees more money than the Fed. Fink told shareholders that Russia’s invasion of Ukraine would fundamentally reshape the world economy and drive up inflation as supply chains are reconfigured.

“The Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades,” Fink wrote.

Fink predicted “companies and governments will also be looking more broadly at their dependencies on other nations. This may lead companies to onshore or nearshore more of their operations resulting in a faster pull back from some countries.”

As a result, “a large-scale reorientation of supply chains will inherently be inflationary,” he said, pointing out that even before the conflict broke out in Eastern Europe, the economic effects of the virus pandemic brought US inflation to its highest in four decades.

Today’s inflationary environment, teetering on the verge of stagflation, has put central banks in “difficult decisions about how fast to raise rates. They face a dilemma they haven’t faced in decades, which has been worsened by geopolitical conflict and the resulting energy shocks. Central banks must choose whether to live with higher inflation or slow economic activity and employment to lower inflation quickly,” Fink said.

Like Fink’s last letter to shareholders, he was focused on the firm’s “ESG” and “green technology” commitments. This time around, he said the invasion “will actually accelerate the shift toward greener sources of energy in many parts of the world,” because higher fossil fuel prices will make the transition of renewables financially competitive. 

“We’ve already seen European policymakers promoting investment in renewables as an important component of energy security,” he said. “More than ever, countries that don’t have their own energy sources will need to fund and develop them– which for many will mean investing in wind and solar power.”

In the short-term, alternatives to Russian energy products “will inevitably slow the world’s progress toward net-zero [emissions] in the near term,” he added. BlackRock is the world’s largest asset manager, which has pushed “ESG” policies that harm American fossil fuel companies, basically following the World Economic Forum’s (WEF) script.

On digital currencies, Fink said the Ukrainian conflict has the “potential impact on accelerating digital currencies. The war will prompt countries to re-evaluate their currency dependencies.” He spoke about central bank digital currencies (CBDC) and how they “can enhance the settlement of international transactions while reducing the risk of money laundering and corruption.” Again, Fink is following WEF’s script of implementing new forms of digital currency that will mean governments will have more control over the people.

Fink also praised how global corporate elites banded together following Russia’s invasion and isolated Moscow from the global financial system overnight, paralyzing the country’s economy. He said the private sector demonstrated the power of the capital markets:

“Russia has been essentially cut off from global capital markets, demonstrating the commitment of major companies to operate consistent with core values. This “economic war” shows what we can achieve when companies, supported by their stakeholders, come together in the face of violence and aggression,” he said.

Fink has made clear that the conflict in Ukraine is being used as an accelerator to reorganize the global economy as the old world order crumbles and a multipolar world emerges. Supply chains will be onshored or moved closer to home, and the WEF’s agenda of a green new world, more corporate surveillance, and trackable money are inevitable this decade.

Readers can find Fink’s complete letter here

Price Inflation Rates Shoot Above the 1980 Peak

 Clint Siegner

Americans get fed a lot of BS when it comes to price inflation. Prices in the U.S. are rising faster than they were in the late 1970s when gasoline shortages triggered an economic crisis.

Today, supply chain disruptions and exploding prices are also nearing crisis levels.

Meanwhile, there has been a dramatic rise in dishonesty amongst politicians, bankers, and the corporate press on this subject. They hide the truth on inflation for a couple of reasons.

For starters, the establishment doesn’t want people alarmed to the point of dumping dollars and fixed-rate debt such as U.S. Treasuries. Officials need strong demand for both, because the supply they are producing is so massive.

U.S. debts and obligations are much too large to be honored – at least in today’s Federal Reserve Note “dollars.” The politically expedient option is a default through currency debasement – lessening the real burden of debt and entitlement obligations.

The key is to keep Americans docile, holding onto Federal Reserve Notes and Treasury debt, and getting gradually poorer.

The same is true in other nations as well. Andrew Bailey, Governor of Britain’s central bank, said the quiet part out loud last week:

“In the sense of saying, we do need to see a moderation of wage rises. Now that’s painful. I don’t want to, in any sense, sugar that… it is painful. But we need to see that in order to get through this problem more quickly,”

He wants the British to stand there and take it. It didn’t go over too well.

He probably won’t slip up and tell the truth again. Officials certainly do not want people angry about rising prices.

President Biden is feeling some heat of his own. It would be much worse if people knew the truth, but most don’t.

The modern Consumer Price Index (CPI) is a form of deception. The chart below shows the difference between the heavily managed CPI number published by the BLS versus the 1980 method. We covered the tricks officials have been using to disguise the rapid decline of the dollar last week.

Consumer Inflation - Official vs Shadow Stats (1980-Based) Alternate - Year to Year Change. Through Jan. 2022 (Published: Feb. 10, 2022)

Most Americans would be surprised to know if price inflation was calculated using the same methodology the Bureau of Labor Statistics used during the 1980 peak, inflation would officially be worse now than it was then.

Rigging the data isn’t the only way officials mislead people. In Joseph Goebbels style, a good part of the strategy is telling good, old-fashioned lies so often people will accept them as truth.

Here are a couple examples of the lies:

  • Inflation is a good thing. Don’t mind the fact that money purchases less each year because it is a symbol of economic growth.
  • Higher prices are transitory. The forces driving inflation will soon moderate.

Today’s mounting inflation crisis is very different from the one forty years ago. Fed bankers have nowhere near the leeway to hike interest rates and bring surging prices back under control.

The equity markets cannot stomach rates above the low single digits. Markedly higher interest rates would also blow up the federal budget as well as destroy the U.S. banking system.

People should simply expect more of the inflation disinformation campaign and invest as if prices are rising twice as fast as they are being told.

Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named “Best in the USA” by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.