Sunday, September 20, 2015

Inflation is Way Beyond What is Reported

We have this constant interference by the powers-that-be to not let the markets function properly. In the bond market, it’s through low interest rates. I personally suspect that governments are in the stock market. We know the Japanese buy stocks. We know that the Swiss national bank buys stocks. We don’t know for a fact that the US government buys stocks but there might be methods by which they can convince people to “keep it together.” Every time we get a little correction, it bounces right back up again.

So that’s just the environment we’re in. We’ve spent all this money. We’ve taken rates as low as we can get them and we’re just hanging in there. Even recently we had the GDP for 2011 to 2014 revised down so that it turned out to be 2% a year. Of course the 2% is a function of the inflation rate. Say, if inflation was reported as 1% but is really 3%, then you had no growth because GDP is just a dollar number.

My own feeling is that inflation is way beyond what’s reported. If inflation really was 5%, and you said GDP growth was 2%, then the real growth is -3%.

So I’m not a believer that there is any economic recovery that’s sustainable. I always say we’re trying to get liftoff. But we don’t get liftoff because we haven’t finished the cleansing process yet.

- Eric Sprott via Proactive Investors