{"id":321725,"date":"2022-10-21T04:00:19","date_gmt":"2022-10-21T08:00:19","guid":{"rendered":"https:\/\/www.sgtreport.com\/?p=321725"},"modified":"2022-10-20T13:17:06","modified_gmt":"2022-10-20T17:17:06","slug":"i-call-the-feds-bluff-theyll-pivot-long-before-inflation-hits-2","status":"publish","type":"post","link":"https:\/\/www.sgtreport.com\/2022\/10\/i-call-the-feds-bluff-theyll-pivot-long-before-inflation-hits-2\/","title":{"rendered":"I Call the Fed\u2019s Bluff: They\u2019ll Pivot Long Before Inflation Hits 2%"},"content":{"rendered":"

by Jeff Clark, GoldSilver<\/a>:<\/em><\/p>\n

\"\"<\/p>\n

It was a fight!<\/p>\n

My keynote presentation at the New Orleans Investment Conference pitted the Fed against gold, me playing both parts by using different caps when one or the other was talking. I wanted to do this because I\u2019m continually flabbergasted by how much faith mainstream economists and investors put in what the Fed says, what I view as nothing much more than marketing.<\/p>\n

TRUTH LIVES on at\u00a0https:\/\/sgtreport.tv\/<\/a><\/p>\n

So, I decided I would go through 5 major claims from the Fed, and then have gold refute each one of them\u2014using the Fed\u2019s own data. It was both fun and useful, and we\u2019ll post the video once it\u2019s available.<\/p>\n

One of those claims is the Fed\u2019s public statement that they\u2019ll lower the CPI to 2% by \u201clate 2023.\u201d This is a joke on its face. Here\u2019s the proof, right from the Fed\u2019s\u00a0own<\/em>\u00a0data\u2026<\/p>\n

The Ghost of Paul Volker<\/h3>\n

Fed Chair Jerome Powell said last month that they are \u201cresolute\u201d in bringing down inflation. They \u201chave the tools\u201d and \u201cit\u2019s been done before,\u201d referring to the Paul Volker days when inflation was in runaway mode and he brought it down.<\/p>\n

But history shows it wasn\u2019t that simple. And it definitely wasn\u2019t that quick.<\/p>\n

This chart shows the CPI (bars) and the Fed Funds Effective Rate (line) from the time Paul Volker was hired in 1979. Look how long it took for him and his team to get inflation below 5%.<\/p>\n

\"Fed<\/p>\n

After Paul Volker was hired, the CPI continued to rise for over a year. In other words, the tools the Fed used at the time took a substantial amount of time to begin to work.<\/p>\n

Further,\u00a0it took the Fed almost 5 years to push inflation below 5%<\/strong>. Those counting on inflation to cool had a long wait.<\/p>\n

And then look what happened\u2026 the CPI popped back up to 7% almost right away and didn\u2019t fall below 5% again for another two years.<\/p>\n

You might claim that inflation today is nowhere near the lofty levels of the 1980s. True\u2014but it\u2019s all relative. Reducing inflation from 22% to 5% is the rough equivalent of reducing it today from the 8% range to 2%. Both require the CPI to fall by over 70%.<\/p>\n

What\u2019s clear from the historical record is that lowering inflation from high levels\u2026<\/p>\n