...its purpose no longer satisfies the need. In our endless campaign against the Federal Reserve, we have touched on the many lies the firm uses to deceive and manipulate, including the most recent version. We heard the ex-chairperson, "Yellen" Yellen claim that even though our economy revealed two consecutive quarters of negative growth, we are not in a recession. She puts her claim through job growth and the steady sales from consumers. She even threw out a new version of the word, "transitory" with the nature of inflation. We are in "transition." That is true. The middle-class is bordering to the lower class. The lower class is in poverty. Anyway, she was not alone. The usual shills of the Fed, JP Morgan and Goldman announced a bottom in the selling in the market. Here, at Evolution, our ego was hurt that no one called on us for further predictions as our sad outlook came to fruition. We are not only in recession, but the worst form of economic activity, stagflation. We will make our future call on the economy after the market tests its low. We are in a bear rally.
NBEC
The National Bureau of Economic Research gets the recognized nod to announced whether we are in a recession or not. Their chief indicator is two straight quarters into negative growth to which has occurred. Keep in mind, the criteria has been massaged countless times to make the Fed look good. Even with the Fed's matrix formula, our economic problems are mounting. This group has the Monday Morning Quarterback situation on their side. They get to make the call when the game is over. We, at evolution made our call over a year ago. Now, we will "call-out" Yellen on her job growth claim.
Demographics...
...is a central cog in any economic growth pattern. You need workers to manufacture product, to ship product and to sell the stuff. COVID-19 reminded the rich about ordinary people. Many are still missing in this so-called recovery. Then, came supply issues and price explosion. Inflation actually helped in one way. Retiring workers became fearful of it and they have continued to punch the clock. However, we all suffer from it. Now, the size of our nation with 330 million people has a natural addition to the economy. When kids turn eighteen, they begin to look for work either part-time or fulltime. So, every June or there about, our nation has 150,000 who might seek work. Yellen proudly says, "Our economy added 372,000." Dear Reader, you have to subtract 150K from any figure to really see the growth number. Now, over 200,000 jobs is really still a good number, but we told you about a report that shows two-thirds of these jobs are taken by someone who already has a job. They need the extra income to make ends meet. Congress never suffers from a balanced budget and that should be the natural law of the land. Anyway, if two-thirds of the 200,000 is a second job, where is the growth? You get the real answer in the job participation report. We are millions away from a strong economy.
Flexible CPI
Ever hear of it? It is an indicator that the Fed uses for inflation, but never discusses. It includes new vehicles, gasoline and jewelry. Guess what it revealed about our present inflation?
"Time has come today..." Sorry, whenever I use the words, time has come, I go into the Chamber Bros. Time is up. 41.5%. Ouch! No! Double ouch!! The kept quiet formula shows a year over year (yoy) with inflation at 18.7%. This is a figure that I can believe.
History Repeats
We get a lot of talk about the expression. Nothing is exactly the same. However, Fibonacci math reveals the similarities. Let us stroll back to the 1970s when inflation threw everyone for a loop.
The Fed chair at the time was Arthur Burns. When asked if the nation was in recession, he said, "No. We have a strong labor market." Powell made the same statement recently.
During the 70s we had three recessions. Each one showed a strong payroll growth prior to each recession. Then, to fight inflation, Burns raised the interest rates or the Fed-Funds rate. Powell is following his game plan.
The first time, it went from 4% to over 8%. Then, Burns claimed inflation licked. The rate dropped to below 4%. Not for long. It rose to over 12% (love to get a bond paying that). Finally, he once again claimed victory only to be defeated by inflation. The rate went from 4% to over 18%. Yes. This is no typo. People, inflation rotates from segment to segment. We are in the second cycle. The first was never recognized, but citizens felt its pain. Food banks know this to be a fact. We will probably get two more inflation runs. So, remember this wisdom on inflation, "Words are cheap, prices are reality." Peace.
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