The trade wars are taking root and finally, finally the damage is starting to ripple through not only Wall St, but Main St as well, as inflation steadily ticks higher.
This comes on the heels of a rate cut last month, in which one of the reasons why the Federal Reserve acted, was because they believe inflation was too low.
This is laughable that this is even a reason to act and it just goes to show the complete disregard that the Fed has for the average person on the street, who works hard their entire lives, saves for retirement, just to see those saving slowly chipped away
The Federal Reserve has a 2% inflation target, a target that until recently they believed they would not reach.
That may however be about to change, as the Labor Department stated on Tuesday that its consumer price index increased by 0.3% last month, surpassing some analysts expectations.
Meanwhile, CPI Goods are up 0.4% year over year, which is the highest level since November 2012.
Relatively speaking, these levels are minor and nothing major to worry about, but what is truly worrying is how the Federal Reserve openly admits that they would love to see inflation rise to higher levels.
Rest assured that this recent uptick in inflation is going to do nothing to change the Federal Reserves easy
Both Goldman Sachs and Morgan Stanley are amongst those who believe that more rate cuts are on the way, with Morgan Stanley even going as far to predict that rates are going to return to zero, which is pure madness.
These additional cuts are only going to fuel inflation to even higher levels.
Sadly, more pain is on the way as we have yet to see the full ramifications of the ongoing US - China trade wars, that continue to loom over the worlds head.
Next month, on Septemeber 1st, an additional 10% in US tariffs are set to be enacted on Chinese goods entering into the country. It is expected that this will affect roughly $300 billion worth of imports.
Once again, these tariffs are going to hit consumer goods the hardest, as that it predominately what is imported from China, meaning that new highs in the CPI goods are likely on the way.
This strategy to drive prices higher and force companies to move the production of their goods to other countries is working, as I have recently highlighted, however, it is undoubtedly going to cause some short to medium term pain for consumers as well.
President Trump once again inflamed the divide between the United States and China, taking to twitter to launch a renewed attack on Tuesday;
"Through massive devaluation of their currency and pumping vast sums of money into their system, the tens of billions of dollars that the U.S.
No one is going to come out unscathed from these trade wars.
Sadly, it appears that we are going to be entering into a new era of rising inflation, as the Fed continues to be beholden to the
Fortunately, this is exactly where precious metals come into play and as we have witnessed recently, are doing exactly what they should do in their time of need.
Most notable has been gold, as it continues to maintain above the crucial $1500 level, despite suffering repeated attacks from those who would love nothing but to see it brought lower.
If these trade wars are not rapidly brought to a close, then I believe that gold is destined to go higher, much higher, possibly even testing than breaking through old highs, with silver rapidly following suit shortly after.
The trade wars continue on, the easy money policies continue on.
Keep stacking.
- Source, as seen on the Sprott Money Blog
