Yesterday’s CPI showed why nearly all people who pretend they know really have no clue

ZeroHedge/Michael Every/9-14-2022

graphic image of inflation genie out of the bottle“Yesterday’s US CPI report was one of those market-moving blockbusters that underline why nearly all the people who like to pretend they know what is going on really have no clue. I include myself in that group too for having been swept away by the trend expecting a weak inflation number for August on the back of lower gasoline prices – though in my defense I have been warning ‘not transitory’ for over a year, and yesterday specifically flagged that US CPI was only going back to 2% again in magical DSGE models, not real life.”

USAGOLD note: As the 1970s Fed learned the hard way, talking about getting the genie back in the bottle and actually doing it are two different things. The Fed chased the inflation rate for a decade before actually getting interest rates above the inflation rate (thus putting an end to inflation). As we mentioned in Wednesday’s Daily Market Report, if the Fed was hoping for a sign of future convergence between the interest and inflation rates, it didn’t get it from Tuesday’s data. In fact, inflation might very well be headed in the opposite direction.

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