2022/09/12 (067) Column

„History Doesn`t Repeat Itself, But It Rhymes:
I Rhymed Some Lines About Inflation
From The 1970`s And/Or Today“


History Doesn`t Repeat Itself, But It Rhymes:
I Rhymed Some Lines About Inflation From The 1970`s And/Or Today

There is a lot of speculation and/or writing about the current unflation we are currently in – i.e. the interaction between financial market prices, economic development and/or central bank policy. Related to the US. Referring to us in the Eurozone, especially here in my home country of Germany. So let’s take the US as an example; because, in the Internet, most historical data is publicly available for free. And getting straight to the point: US inflation today is the worst since the late 1960s and 1970s. Nevertheless, the current experience differs from the earlier period in several important respects. “Unlike 55 years ago, the current inflation has developed without a real growth boom in the US. Real wages and real incomes are also declining, which was not the case in the 1960s, when inflation started,” formulated a few days ago Michael Bazdarich, product specialist and economist at Western Asset Management, part of Franklin Templeton, in a recent analysis. And because of that I had just come up with the idea of writing this comment today. Because he pointed 4 different triggers out: back then and now differents triggers; back then were no falling real incomes of this magnitude; the big difference is that inflation increases are diversified; and/or an higher inflation rate breaked out due to Corona measures and green policy are the 4 main differences from then and now – to put it in my own words – according to Michael Bazdarich, of Western Asset Management, which is part of Franklin Templeton.

Different triggers then and now
“Current inflation trends differ in important respects from those of the late 1960s and 1970s,” emphasizes Bazdarich. “Inflation then set in after more than years of strong growth and significantly lower unemployment than before. Today we are dealing with inflation that comes after a year of economic growth that has not been able to offset the declines caused by COVID-19 – despite a higher unemployment rate than before.” What I have also perceived; as you can read in my previous DEVISE 2 DAY editions. I have been arguing like this for weeks and months, too. And would like to add that cheap Fed money, as an expansionary monetary policy, including an expansionary left-wing green socialist US fiscal policy, is the real toxic cocktail what is driving up inflation. Because only more expensive money, compared to goods and services, can curb demand. And so bring the demand down. That´s why higher interest rates – higher as the us inflation, at least. And that with the risk of forcing the economy to a standstill; possibly possibly pushing into a recession.

Back then were no falling real incomes of this magnitude
Current inflation is worrying us consumers and taxpayers (which we all are, regardless of how we make a living) in a way that inflation in the 1960s was not. Because our real income (i.e. the basket of products and services that we need every day within a year to at least maintain our standard of living) leads to a decline that was not observed in the late 1960s and early 1970s. The real yield is much loweras back than.

The big difference is that inflation increases are diversified
“Recently, price increases in goods and services have been more divergent than in the 1960s and 1970s. This indicates that the inflation of the 1960s was driven by monetary policy, while the current inflation is driven by supply constraints.”, Michael Bazdarich also points out in his analysis. And that is the only point on which I would strongly disagree. And that too at the risk of may be being wrong; and not he. Because in an economic environment where producers, traders and/or service providers know that more and more and more money is in circulation, due to the expansive monetary policy and/or fiscal policy described in point 1, it is much more likely that a each individual thinks: „Oh, the prices are going up, so i will also make some profits more. Of Course! Why not?“. So that there is something like a self-fulfilling prophecy in the price development. Which cannot be fundamentally justified mathematically, but only in the form of semantic stories, anecdotes. Narrative is the favorite word of many modern price-gougers; to prevent imminent disaster in the future. And not just in right-wing conservative capitalist private sector; from producers, dealers and service providers. But rather also thanks left-wing green socialist politicians, who rightly rhyme under the cloak of freedom, a liberal society, according to their legitimacy. Which ultimately only costs us consumers and taxpayers (who we all are, regardless of our political views). And don’t get me wrong. Of course, of course, there are also right-wing politicians who (un)spokenly organize politically higher consumer prices and taxes. But I don’t know of any left-wing green socialist politicians who want to organize fewer taxes. Meanwhile also cheaper consumer prices, in the name of a green future. And or also support their voters to be able to finance their livelihood themselves. Rather, to increase it successively every year. Wondering why? Right; that`s left! Because then you would be right capitalists…

Higher inflation rates breaked out
due to Corona measures and green policy
“Prices are currently under strong pressure after a much weaker upswing than in the 1960s and in view of sharp price increases. Since monetary policy is also subject to further tightening, these effects will intensify,” predicts Bazdarich in conclusion. Yes, I agree with him on this point too – without wanting to add anything. Apart from finally wanting to predict that we, in our so-called West, will not get out of the spiral of inflation without a classic restrictive monetary policy, but also rather fiscal policy. Which we can understand very well, especially in my home country Germany. After we have given up our political so-called “black zero”. This was a 2009 Federal action and response to the US financial crisis following the Lehman Brothers disaster in 2008. And was unspoken also one of the main reasons for our economic growth, in my homeland germany, without inflation, in the last years and/or decade. Even since EUR introduction. Incidentally, after a referendum in 2001, the debt brake came into force in Switzerland. That`s why it`s not surprising that CHF, let alone inflation, is not so under pressure in these times…DEVISE 2 DAY Another 48 Hours – Where I Was Wrong, Whre I Was Right

As a principled conservative freedom lover, i will be violating one of my principles this week.
And live my highest principle out, which is: “Sometimes you have to go against your own principles!”

What happened?! What happened!? I took some e-mails from my readers to heart; due to your criticism that my recent issues are bland and boring.
Not in what I write, but in terms of the number of various 4XSetUps Trading Capabilities. Which I hereby expressly do not contradict; that’s right. But I figured I’d use a smaller numbers 4XSetUps Trading Capabilities a try. Like an old US Wall Street veteran. And not like a young green soldier who, with wide blue eyes and/or running water in his mouth, can’t wait to go to war when he gets up in the morning. I don’t want my DECISE 2DAY Affiliate Financial Market Online Newspaper to satisfy your thirst for adventure, my lovely dear readers. Rather, I would like to help you so that, after reading each edition, you not only feel more informative and competent, but actually truly are. And thus make even better trading decisions (buy/sell or no trade).

But okay, admittedly; Count me in. After all, I write my thoughts primarily for my readers. Yes, also for you. right for you too. And I’ll just make sure that we’ll have an average of one or two handfuls of open 4XSetUps in the future! Although sometimes at 44 years I feel like Danny Glover (“I’m too old for this shit!”) from the 4-part Hollywood police cinema action movie Lethal Weapon. Who can hardly wait for his police colleagues to finally send him into retirement. Because of the everyday theather. But what else am I supposed to do? I’ve been dealing with US WallStreet for more than half my life, (in)directly (un)successfully…

However, basically I’m still bullish on the USD. Everything fits; about the USD index for us (compared to all major currencies from the index basket). And that’s why I want to secure our profits, because they have accumulated better than originally thought. By that I mean take our long 4XSetUps Trading Capability profits at the latest at 107 points. At 106.99 points and lower, stay neutral for the time being. And long again at 107.01 points and/or above; if the USD index falls down and/or comes back. A concrete Technical Analysis 4XSetUp will be available again next week. Because this week, in each DEVISE 2 DAY Affiliate Financial Market Online Newspaper, there will be new long 4XSetUp Trading Capability of various individual stocks, a single currency pair, and/or a stock market sector indices. In addition to the renewed long 4XSetUp Trading Capability in the DOW JONES Future, from to the start of this week…