from Yahoo Finance
What Causes Stagflation?
by Frank Shostak
Mises.org
In the late 1960s Edmund Phelps and Milton Friedman challenged the popular view that there can be a sustainable trade-off between inflation and unemployment. In fact, over time, according to PF, loose central bank policies set the platform for lower economic growth and a higher rate of inflation, or stagflation.
PF’s Explanation of Stagflation
Starting from a situation of equality between the current and the expected rate of inflation, the central bank decides to boost the rate of economic growth by raising the growth rate of money supply. As a result, a greater supply of money enters the economy and each individual now has more money at his disposal.
Because of this increase, every individual believes he has become wealthier. This raises the demand for goods and services, which in turn sets in motion an increase in the production of goods and services.
Gold, Silver, U.S. Dollar, Euro, Inflation and Oil
from King World News
Here is a look at gold, silver, the US dollar, euro inflation and oil.
June 10 (King World News) – Peter Boockvar: In response to the parliamentary election results in the EU, the French CAC index is getting hit the hardest, down about 2%, though there is weakness across the board, as Macron in response is calling for an early parliamentary election in France (first round June 30, 2nd round July 7) where the results could influence his ability to get things done. The next presidential election in France is not until 2027.
As for the overall election results, there was a reason why some in the UK were happy to leave the EU and that was to avoid the bureaucratic rule making of the EU parliament. Sovereign bond yields are higher by 5-10 bps and the euro is falling to the lowest level since early May vs the US dollar.
Inflation Data This Week Could Help Determine Fed’s Timetable for Rate Cuts
by Christopher Rugaber
AP News
WASHINGTON (AP) — After Federal Reserve officials meet this week, a statement they will issue may suggest that they’ve seen meaningful progress on inflation this year — a prelude to eventual interest rate cuts.
Yet it’s hard to say, because the officials themselves may not know for sure until they begin their meeting. That’s because the government’s latest snapshot of U.S. inflation will be released Wednesday morning, just before the Fed begins the second day of its policy discussions.
One key issue is a sentence the Fed added to its statement after its last meeting May 1: It said “there has been a lack of further progress” in bringing inflation back to the central bank’s 2% target.
Inflation, Fed Meeting to Give Clues for U.S. Market Direction
by David Randall
Reuters.com
NEW YORK, June 6 (Reuters) – Investors will closely watch next week’s inflation numbers and Federal Reserve meeting for clues on whether the soft landing hopes that drove stocks to record highs are still justified.
This year’s rally has lifted the S&P 500 up more than 12% year-to-date, on expectations the Fed can cool inflation without hurting growth. Yet recent economic data have sent conflicting signals: U.S. employment numbers released Friday were far stronger than expected, while earlier reports showed a slowdown in manufacturing and a first-quarter growth rate revised lower.
May inflation data, due next Wednesday, must walk a tightrope to satisfy expectations of a “Goldilocks economy”: satisfactory growth with prices under control. Later that day, investors will look to the Fed for signals on the central bank’s rate cut plans.
NYC Parents Outraged Over $14 Waffle Cone Ice Cream: ‘Taking Advantage of Inflation’
by Elizabeth Weibel
Breitbart.com
Parents in New York City were outraged after having to fork over $14 for a waffle cone at an ice cream truck.
Several parents decided to treat their children to ice cream from a pink ice cream truck near Astoria Park in the neighborhood of Queens. However, they paid more than they had intended; one paid $26 for his two children, according to the New York Post.
The ice cream truck reportedly charged $5 in cash for a single cone and $5.99 by credit or debit card. A double cone cost $10 in cash and $10.99 by credit or debit card, while a sundae and milkshake each cost $12 in cash and $12.99 by credit or debit card.
“Some people are taking advantage of inflation,” Henry Fernandez told the outlet, adding that he had given the lady a $20 bill thinking he would “get some change back,” only to end up paying “$26 to treat his two kids” with a small sundae and shake float.
Trump Claims U.S. Inflation is the Worst It’s Ever Been – Here’s Why He’s Wrong
Inflation is the worst it’s ever been in American history, former President Donald Trump falsely claimed this week at a campaign event, also offering up questionable solutions to the very real issue of Americans’ discontent over their weakened spending power.
by Derek Saul
Forbes
What Is Trump’s Plan For Inflation?
Trump’s inflation salves floated Thursday were similarly inconsistent with conventional wisdom, as he said there will be “a lot of cutting” to interest rates should he win another presidential term. The independently run Federal Reserve is already widely expected to bring down rates this year irrespective of election results. Trump also seemingly advocated for deflation, where prices decrease year-over-year, a concept which sounds better in theory than in practice as it can cause recessions as less money flows into the economy, telling the crowd, “We’re going to get rid of inflation…not just where you don’t have inflation, where going to bring those costs down.” Since 1960, the last year in which prices fell on an annual basis was 2009 during the Great Recession. Trump also told his supporters he will cut energy prices “in half,” a measure that would likely be highly unpopular among the oil and energy companies whose employees he counts among his top donors.
Past Inflation is Politicians’ Biggest Present Problem
Inflation is finally getting back under control but voters are still angry about the steep hikes in many prices over the past four years
by Jack M. Mintz
Financial Post
Governments and central banks are clearly winning the war against inflation, which is falling in most countries. Yet the high cost of living dominates polls in many places and politicians are taking heat for it from their electorates. Ask India’s Prime Minister Narendra Modi, who, despite winning re-election, lost his parliamentary majority as voters turned against his government over bread-and-butter issues. Or check with U.S. President Joe Biden and the U.K.’s hapless Prime Minister Rishi Sunak, both seeking re-election and both mired in poor polling as voters are angry over inflation and their handling of the economy.
The Dollar and Its Domestic Enemies
by Peter C. Earle
The American Institute for Economic Research
Upping the ante following the initial weaponization of the dollar in 2022, the United States and a number of allied nations have agreed in principle to begin distributing profits on seized Russian assets to Ukraine. Interest payments on securities in which hundreds of billions of dollars worth of Russian foreign exchange reserves were invested, including US, European, and other sovereign bonds, would thus be transferred into a trust account accessible to the Ukrainian government. The US assertion of this undertaking was codified as the Rebuilding Economic Prosperity and Opportunity (REPO) for Ukrainians Act, signed into law by President Biden on April 24, 2024.
It is another in a series of unprecedented actions not only intensifying economic pressure on Russia but also signaling a shift in the economic dimension of current geopolitical conflicts. And it raises questions as to whether the entirety of those seized assets might be turned over to Kyiv should their reportedly declining war effort continue to weaken.
The Achilles Heel of the Fiat Money System
by Thorsten Polleit
Mises.org
The fiat money system will not disappear just like that. Any expectations or hopes to that end should be tempered. Yes, the fiat money system could collapse; yet there is a significant likelihood it will persist longer than most people might think. This prolonged existence may come at a cost: a fascist state encroachment on the freedoms of citizens and entrepreneurs would be more profound than most people realize.
Much ink has been spilt about the impending collapse of the international fiat money system. It is a debate that naturally gains momentum in times of crisis—as witnessed in the aftermath of the 2008/9 global financial market debacle or the politically dictated global lockdown crash of 2020/21.
At the same time, however, it is entirely justified to harbor significant concerns regarding the fiat money system. After all, it is plagued by blatant economic and ethical defects.
Inflation’s Strain Remains Gold’s Bane
by Mark Mead Baillie
GoldSeek
We start with inflation. Year-to-date we’ve diligently documented that ’tis nowhere near the Federal Reserve’s sought 2% target. And not that you need be reminded, but with May inflation readings commencing next week, let’s briefly reprise April’s inflation summary as herein presented a week ago. The data speak for themselves:
[…] Now a week hence, Friday’s StateSide jobs report for May had “inflation” written all over it: per the Bureau of Labor Statistics, the pace of Hourly Earnings doubled from +0.2% in April to +0.4%; the net increase in Non-Farm Payrolls was the largest year-to-date and incorporates those higher wages; and yet (wait for it…) the rate of Unemployment nonetheless ratcheted higher from 3.9% to 4.0%! How does that happen? Cue the late great Bullet Bill King: “Holy Toledo!”