CPI on message

CPI increases more than expected, but it’s not forward-looking

See Inflation increased 0.4% in September, more than expected despite rate hikes

Well first of all guys, CPI is not inflation. It is a measure of the effects of the inflation that was manufactured over 2 years ago. If Steve Saville‘s interpretation of Austrian True Money Supply (TMS) is on point – and I think it is – then you can clearly see the manufacture of inflation in early 2020 and just as clearly see the withdrawal of inflation in 2021.

Ah, but this is a media (social, internet, TV, print and otherwise) driven society and there’s nothing like some good old sensationalism to harvest mass eyeballs and get the herds riled up and running.

The reason CPI is on message is because we are looking for a setup. A real and rare setup whereby the herds are compelled to and over that cliff over there under the weight of relentless bias confirmation. The herds are pissed about inflation, you know.

With the altered state of the 30yr yield Continuum (article on its role with respect to a ‘post-bubble contraction’ coming later) the macro has changed fundamentally and I for one am very open to a persistently strong new phase of inflation. But if you’re not taking into account shorter-term events then you might miss an interim phase going the other way.

The bottom line as I see it is that for years disinflation was the trigger for more inflation. Today, hyper-active inflationary headlines may be the trigger for disinflation or a deflationary episode. But first, pressure continues to build. It’s a process.

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