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John Williams continues:


“The current level of inflation, however, stands where it is due primarily to the effects of the Federal Reserve’s efforts to debase the dollar, which, in turn, spiked global oil prices into the $100 per barrel range.  The effects of the dollar-debasement and oil-price-spiking policies not only had direct inflationary impact on energy-related prices, but also—in the period following QE2—had an accelerating upside impact on inflation throughout the broad economy, as indicated by rising “core” inflation (net of food and energy inflation).

While the Fed and Wall Street like to tout “core” inflation, since rising food and energy prices can be ignored, protracted higher oil prices—in particular—eventually work their way into the broad economy and create inflation issues that are tough to ignore and for the Fed to contain.

The following graph reflects year-to-year “core” inflation as reported for both the CPI-U and PPI, since the onset of QE2.  The annual CPI-U “core” inflation rate for February softened slightly, after 15 straight months of higher annual inflation.


The inflation ahead very much will be tied to the exchange rate value of the dollar, which should be hit heavily by eventual dollar dumping in the global markets.  That event could be triggered by the Fed’s next effort at easing, which likely will be aimed at propping the banking system, under the guise of trying to boost economic activity.  

The U.S. Treasury/Administration and the Fed will use whatever lending, spending, guarantees and money creation that are needed, in order to prevent a systemic collapse, much as was seen in 2008.”


Regarding volatility in gold and silver, Williams stated:  “Market conditions remain unstable and highly volatile, and the precious metals and stronger major currencies remain the primary hedges against the coming U.S. dollar calamity.  Recent upside pressure on oil prices primarily reflects supply concerns tied to political instabilities in the Middle East, but those pressures have built upon the upside shift in oil prices that was triggered by the Fed’s policies (i.e. QE2) aimed at debasing the U.S. dollar.”


The above was just a small portion of another top shelf report by John Williams of Shadowstats.


To subscribe to ShadowStats CLICK HERE.


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