Via SchiffGold.com,

American consumers aren’t buying the transitory inflation narrative.

Even after five straight months of annual CPI increases over 5%, Jerome Powell continues to insist inflation is “transitory” and the result of a “supply chain problem.” But according to the New York Federal Reserve Survey of Consumer Expectations, people aren’t buying this story. They expect inflation to be running at 5.7% a year from now. And in three years, they still expect the inflation rate to be at 4.2%.

In its most recent FOMC statement, the Fed claimed: “the Committee will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer‑term inflation expectations remain well-anchored at 2%.”

As WolfStreet put it, inflation isn’t anchored at all. It’s totally unanchored and spiking to high heaven.

In March 2022, consumers expected inflation to be at 3.2%. It’s clear that expectations for higher and higher prices are rising. As WolfStreet explained, as actual prices have surged, consumers can see where this is going.

They can see that even the Fed is starting to back off its mantra that this red-hot inflation is just ‘temporary,’ and they’re not fooled by some Fed officials’ efforts to redefine ‘temporary’ to mean the opposite of temporary. It’s at the point when consumers think inflation will remain high that they change their behavior and contribute to even higher inflation.”

Inflation expectations play into the inflationary spiral. In theory, when consumers expect prices to rapidly rise, it impacts their behavior. They begin to push purchases forward to avoid higher prices later. They also become willing to accept higher prices rather than walking away. This altered behavior can theoretically increase inflationary pressure in the future.

Consumer inflation expectations a year from now for many important categories are even higher than 5.7%.

• Rent: +10.0% (new record)

• Food prices: +9.1% (new record)

• Gasoline prices: +9.4%

• Health care: +9.4%

• College education: +7.4%.

Meanwhile, the Fed refuses to take any responsibility for inflationary pressure. There is no acknowledgment that trillions in money printing might be contributing to rising prices.

In the 20 months since March 2020, the Fed has increased the assets on its balance sheet by $4.2 trillion. It’s nearly doubled its total assets to $8.6 trillion. Meanwhile, the US government unleashed over $5 trillion in deficit spending. That totals nearly $10 trillion in stimulus.

It was, by definition, trillions in inflation.

In one sense, the Fed and the mainstream pundits are right. Consumer demand is up and Americans are spending a lot of money. But they are right for the wrong reason, as Mises Institute managing editor Ryan McMaken pointed out.

If we look at the immense amount of new money created over the past eighteen months, we should absolutely expect people to have more money sloshing around. But this also means a lot more pressure on the logistical infrastructure as people buy up more consumer goods. The idea that supply chain problems are ‘driving inflation’ gets the causation backward. It’s money supply inflation that’s causing much of the supply chain’s problems. Not the other way around.”

Regardless, Americans aren’t buying the Fed’s transitory narrative. They can see the writing on the price tags. Inflation expectations are unanchored. This is just one more brick in the inflationary wall.

Famous short seller Michael Burry of The Big Short game briefly emerged from a his latest self-imposed twitter exile to offer his thoughts on why Elon Musk might now all of a sudden be in the mood to start selling stock. Shortly thereafter, on Tuesday, Tesla shares plunged 10% in just minutes, leading many to speculate as to whether or not Elon Musk had started selling his personal stock. 

Burry jabbed at Musk this week, suggesting that the Tesla CEO may need to sell his shares because he had 88 million of them pledged as loan collateral. 

“Regarding what @elonmusk NEEDS to sell because of the proposed unrealized gains tax, or to #solveworldhunger, or … well, there is the matter of the tax-free cash he took out in the form of personal loans backed by 88.3 million of his shares at June 30th,” Burry wrote in a now deleted Tweet that was captured by the Business Insider tabloid. 

Burry also suggested that Musk’s narratives about “solving world hunger” or “unrealized tax gains” are diversions from the real reason the Tesla CEO is selling stock. Instead, the iconic investor insinuated that Musk needs to service the loans he took out against his shares.

Musk had 41% of his shares pledged as collateral as of December 2020 and 48% as of June 2020, Insider reported.

As he usually does, Burry also drew comparisons between today’s market and the Dutch Tulip bubble. He has made his Twitter header a Brueghel painting called “Satire of the Tulip Mania,” which shows tulip “investors” as monkeys, speculating, taking on debt, and fighting – all over the “mania” in tulips that took place. 

Burry has been vocal about warning about our current stock market bubble.

“People say I didn’t warn last time. I did, but no one listened. So I warn this time. And still, no one listens. But I will have proof I warned,” he Tweeted about markets about a year ago. 

He also commented on Tesla golden child Cathie Wood, earlier in the year, Tweeting: “It is too early, she is too hot, and, today, short sellers are timid, but Wall Street will be ruthless in the end.”

Burry, recall, revealed a huge Tesla short earlier in 2021 but as of one month ago he was no longer betting against Tesla and said that his position was just a trade.

Burry has also been vocal warning against a bitcoin bubble. Of course, if he was also short the crypto space in addition to TSLA, his losses in 2021 could be Jess Livermore-sized….

By Michael Every of Rabobank

The Fed’s bi-annual Financial Stability Report is making headlines: “Prices of risky assets keep rising, making them more susceptible to perilous crashes if the economy takes a turn for the worse.” It also notes asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, or if progress on containing the virus disappoints. Presumably the latter is why the White House insists businesses proceed with its vaccine mandate despite a court ruling the process be halted: Think of the stocks, man, think of the stocks!

Except, of course, we all know that if stocks slump, the Fed will increase QE again to push them back up, because stocks are what it cares about. FOMC members themselves play the markets and would lose out personally if they let asset-prices crash. Moreover, how did asset prices get to such risky levels? Did a financialized, asset-based economy ‘just happen’? I recall Alan Greenspan warning about “excessive exuberance” once upon a time too.

Even if the Fed isn’t venal, it is political. Powell may or may not get reappointed as Chair, but today he is attending a conference presenting “research about diversity and inclusion in economics, finance, and central banking.” Is that a backdrop against which the Fed could pivot towards cracking down on financial excesses, when such hairshirt policy could be decried as running counter to demands for higher public spending and social justice? In short, it looks another reason for the Fed to stay loosey-goosey, even if this asset-based approach is actually driving massive economic inequality across all of society. Indeed, the Report notes:

• “Leverage continued to be high by historical standards at life insurance companies, and hedge fund leverage remained somewhat above its historical average.” – and who regulates financial leverage?

• “Structural vulnerabilities persist in some types of MMFs and other cash-management vehicles as well as in bond and bank loan mutual funds.” – and who regulates MMFs and mutual funds?

• “There are also funding-risk vulnerabilities in the growing stablecoin sector.” – and, yes, it’s the SEC who seem to have acted a little on crypto….because the Fed has sat there while a $3 trillion ‘print- your-own-money’ fest has happened right under its nose. Bitcoin is now at another record high of$67,000. And IOU Chicken, man, IOU Chicken.

Only in one area do we see a fire the Fed didn’t start or watch burn, as they note: “stresses in the real estate sector in China caused in part by China’s ongoing regulatory focus on leveraged institutions, as well as a sharp tightening of global financial conditions, especially in highly indebted emerging market economies (EMEs), could pose some risks to the US financial system. If realized, the effects of near-term risks could be amplified through the financial vulnerabilities identified in this report.”

Yet can argue China’s US-style housing-bubble driven economy is the underlying problem, not its attempt to finally deal with it in a way the US would never dream of. (Prompting further ‘green’, i.e., no debt red-lines crossed, Chinese developers’ bonds to suddenly collapse in normal trading.) The Fed is thus warning other people not to firefight for it!

The Report also noted that while corporate balance sheets are sound, “the expiration of government support programs and uncertainty over the course of the pandemic may still pose significant risks to households.” Time to get back to those low-wage jobs then, rather than hold out for better pay, or to pass the $1.75 trillion Build Back Better bill? We can guess which Janet Yellen, who often speaks as if she were running both Treasury and Fed, would prefer.

The Report also warns that “difficult-to-predict” volatility like the meme-‘stonks’ frenzy could become more frequent as “social media influences trading”: that, not ludicrous liquidity, “I see no ships” regulatory oversight, and a socio-economic paradigm which does not reward work, just asset speculation. The Fed don’t appear to mention the “difficult-to-predict” volatility in bond markets after their “We are going to take away the punchbowl – ooh, look, here’s a big bottle of Absinthe, drink up!” approach to monetary policy.

In short, it’s a worrying Fed headline. But burn after reading, because the arsonists are doing the firefighting. If you don’t believe that, ask yourself what the Fed is now going to do about any of the points it has listed. Even optimists should watch the final scene from the Cohen brothers’ Burn After Reading for guidance.

And ask the markets. US stock futures were happily in the green at time of writing, and “CALM” was the Bloomberg daybreak headline, which sums it up nicely. I am not sure how many dollars, crypto, or stonks the yacht pictured on a placid sea in the accompanying Bloomberg graphics is worth, but I am sure the majority of the Bloomberg readership, and the Fed, are far better acquainted with these kinds of social niceties than I am.

Meanwhile, the arsonists are also firefighting in geopolitical terms too. On top of a long and growing global list of potentially dangerous flashpoints, Belarus is now creating a refugee border crisis with Poland, Lithuania, and Latvia, playing with fire there, like someone else is in the Balkans. Poland is already doubling the size of its army: the EU are just doubling the size of their rhetoric. Von der Leyen warns sanctions could be placed on Belarus and “third-country airlines,” but this was already threatened in mid-October by Borrell and hasn’t happened – and where was the appropriate EU response to the Belarus plane incident back in May? Hypothetically, what happens if this is soon all linked to critical Russian gas or Belarussian potash exports to the EU? Nice way to divide it even more, if so.

Apple CEO Tim Cook was interviewed by Andrew Ross Sorkin this morning as part of the DealBook Conference.

He revealed that he owns some crypto personally, says “he’s been interested in it for a while” and “thinks it’s reasonable to own it as part of a diversified portfolio.”

Tim Cook of Apple reveals that he has personally invested in cryptocurrency. “I think it’s reasonable to own it as part of a diversified portfolio,” he said at the #DealBook Online Summit. https://t.co/xpahdlKfOe pic.twitter.com/CQpQgShu0x

— DealBook (@dealbook) November 9, 2021

Crypto responded quickly (after getting hammered briefly before as TSLA shares tumbled).

Bitcoin and Ethereum both bounced back fast…

Cook clarified that his interest was from a “personal point of view” and dismissed suggestions that that Apple might take cryptocurrency in exchange for products as tender.

The tech-giant’s CEO also rejected the possibility of Apple buying cryptocurrency with corporate funds as an investment.

“I wouldn’t go invest in crypto, not because I wouldn’t invest my own money, but because I don’t think people buy Apple stock to get exposure to crypto,” Cook said.

Cook also noted that while Apple was looking at cryptocurrency technology, it’s “not something we have immediate plans to do.”

Just hours after admitting that 5 million users’ email addresses were hacked, Robinhood is in trouble again.

DownDetector reports that a number of users are reporting outages on the system:

But perhaps more troublesome, it appears there are issues with money transfers, vis Robonhood’s status page:

Investigating – We’re investigating reports that some customers are experiencing issues transferring money in and out of Robinhood. We’re working to resolve this as soon as possible.

The outages and the money transfer blockage appears to have coincided with the crash in Tesla shares.

Many traders were confused by yesterday’s TSLA action where the stock rebounded and nearly closed green on Monday despite Musk’s rather explicit advance notice over the weekend that he would sell 10% of his TSLA holdings (after a twitter poll told him to do so). Well, maybe it has finally dawned on the market just how big the impact of Musk’s sale would be, or alternatively, he just started dumping because moments ago TSLA stock tumbled moments after the open, plunging more than 10%, and wiping away $150 billion in market cap.

Developing

Authored by Pat Buchanan,

At the end of the first week of the Glasgow climate summit, 100,000 protesters marched to denounce the attendees as phonies who will never honor their commitments to curb carbon emissions.

Despite pledges by 100 nations to reduce methane emissions by 30% by 2030, and by 20 nations, including the U.S., to end financing of new international fossil-fuel power plants, teenage climate superstar activist Greta Thunberg says the COP26 summit is a con:

“Two weeks of business as usual, blah, blah, blah!”

Thunberg has a point.

Commitments made in Scotland are not binding upon governments that, be they autocratic or democratic, do not subordinate their national interests to pledges ostentatiously made in global forums.

This Glasgow summit calls to mind the Kellogg-Briand Pact, which won a Nobel Peace Prize for Secretary of State Frank Kellogg,

On Aug. 27, 1928, 15 High Contracting Parties signed on to renounce war as an instrument of national policy. The signatories that day were the United States, Britain, Germany, Italy, Japan, France, Poland, Belgium, Czechoslovakia, Canada, South Africa, Australia, New Zealand, Ireland and India. Within 15 years, all 15 nations, Ireland alone excepted, were ensnared in the greatest war in history.

Like the pledges at the climate summit, the Kellogg-Briand Pact provided for no means of enforcement or sanctions against nations that failed to live up to their commitment.

Consider. China is the world’s largest emitter of carbon emissions, Russia the fourth largest, and Brazil the seventh largest worldwide.

Yet President Xi Jinping of China, President Vladimir Putin of Russia and President Jair Bolsonaro of Brazil did not show up at the summit. And President Joe Biden of the United States and Prime Minister Boris Johnson of Britain both fell asleep during the proceedings.

Glasgow is destined to fail because national interests invariably triumph over globalism. The demands of the people who keep regimes in power will be heard and heeded before the claims of the transnationals.

Biden, faced with a threat by Sen. Joe Manchin to sink his Build Back Better bill, summarily dropped a measure that would have imposed rising carbon taxes on fossil fuel plants and provided monetary rewards for clean energy facilities. Biden dropped it because his own and his party’s fortunes depend on enacting the legislation.

The protests in Scotland this weekend were far more colorful than the yearlong “yellow vest” protests in France. Yet, the French protests proved more effective and successful.

That movement originated with French motorists from rural areas who had long commutes and were protesting an increase in fuel taxes that was real and immediate. The French protests had a specific goal, and they succeeded in bringing about a reduction in the fuel taxes.

“King coal is dead!” we heard from the summit.

Really?

Coal is a foundational resource in Asia, and demand for coal grows as the populations and economies of Asia expand.

Coal accounts for 60-65% of the electricity generation in China and 68-73% in India, two nations that represent more than a third of the world’s population. Nations such as Australia depend upon the sale and shipment of coal as essential components of their exports.

Consider Scotland itself. Should it move to secede from Britain, will it gladly forfeit the North Sea oil and gas deposits that have proven so beneficial to Britain?

As America transitions to clean energy and electric vehicles, our own reliance upon China will grow. For China is today the world’s principal supplier of solar panels and the rare earth minerals vital to the batteries of electric cars.

To get to Glasgow, delegates, journalists and activists had to travel by commercial or private jet, and every restaurant, bar, hotel room and conference hall had to be lighted and heated by electricity generated by the kind of gas-, oil- and coal-fired plants that global elites want on the chopping block by midcentury. The carbon footprint of the Glasgow summit was not inconsiderable.

Now that the presidents and prime ministers have departed the global summit in its second and final week, we’re going to get down to the lick-log.

Writes the Washington Post: “In coming days … negotiators from nearly 200 countries will haggle over every word in every line of an agreement that could shape … how the rich countries of the world deliver on promises to help more vulnerable nations.”

Specifically, who will pony up the $100 billion per year promised to poor and developing nations at previous climate summits and never fully delivered? And who will pay the reparations for the “loss and damage” suffered by the poor and developing countries, previously caused by the industrialized nations of the world?

At root, almost every globalist and transnational institution and summit has a common feature: the endless transfer of wealth from the First World, the historic oppressors, to their alleged Third World victims.

These gatherings are to determine how much in reparations the latter can extort from a conscience-stricken West.

Will the GOP reject the shakedown?