Bill Gross of PIMCO And Two Top Federal Reserve Policymakers Warn of Impending Inflation


For several years, Notable Independent Commentators, including Deepcaster, have warned that the Elite Central Banks’ Orgy of Fiat Currency Printing, a la QE etc, would result in Price Inflation, so it is no surprise to us that The Bond King, Bill Gross of PIMCO, with about $2 Trillion under Management, would finally warn in his January 2013 letter to Investors of Impending Price Inflation in Key Commodities.  Of course, General Price Inflation is already here, if one looks at the Real Numbers (e.g., U.S. CPI at 9.8% per as opposed to the Bogus Official Ones.

Going forward, this Mega Bank-generated Price Inflation provides considerable Profit Opportunities, but only in certain kinds of Commodities, and especially in one Sector Bill Gross does not specifically mention.  In sum,Policies actually being Implemented by the Power-Banker Elite virtually ensure a continuation of Fiat-Currency Depreciating Policies, and thus Price Inflation in Certain Commodities Sectors, as well as Increasing Risk of Systemic Destabilizing à la 2008-2009.

Gain from Power Elite’s Key Sector Price Inflation

“The future price tag of printing six trillion dollars’ worth of checks comes in the form of inflation and devaluation of currencies either relative to each other, or to commodities in less limitless supply such as oil or gold.


Zero-bound interest rates, QE maneuvering, and ‘essentially costless’ check writing destroy business models and stunt investment decisions which offer increasingly lower ROIs and ROEs.”


Fed’s Plosser: Stimulus May Fail While Fueling Inflation

Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank’s record stimulus risks a surge in inflation and may impair efforts by households to repair their finances.

“Attempts to increase economic ‘stimulus’ may not help speed up the process and may actually prolong it,” Plosser said in the text of a speech Friday in Somerset, New Jersey.

Policy makers are discussing how long they will keep buying mortgage bonds and Treasurys as part of efforts to boost growth and bring down a 7.8 percent unemployment rate. The Fed last month linked its interest-rate outlook to economic thresholds, saying borrowing costs will stay low “at least as long” as joblessness exceeds 6.5 percent and if projected inflation won’t go beyond 2.5 percent one or two years in the future.

“Efforts to drive real rates more negative or promises to keep rates low for a long time may have frustrated households’ efforts to rebuild their balance sheets without stimulating aggregate demand or consumption,” said Plosser, who doesn’t vote on monetary policy this year. He has repeatedly criticized Fed easing for risking higher inflation and jeopardizing the central bank’s credibility, and said the latest stimulus steps do little to boost growth….


Fed hawks worry about threat of inflation

from Reuters: Two top Federal Reserve policymakers expressed discomfort on Thursday with the U.S. central bank’s easy monetary policy, in comments suggesting Fed Chairman Ben Bernanke may face more dissent this year.

In remarks that stamped her as a hawk on the Fed’s policy-setting committee, Kansas City Federal Reserve President Esther George warned that the Fed’s near-zero interest-rate policy – aimed at boosting the economy – could spark inflation….


Ben Bernanke’s Fingerprint Is Clearly Present In The Current Rally. But His Impact Is Diminishing.

For the last four years the Federal Reserve has been actively engaged in supporting the stock market by suppressing interest rates to historically low levels, and injecting liquidity into the financial system, through a variety of different programs.  The most notable, and widely discussed, of these programs has been the Large Scale Asset Purchase programs (see here and here) which have become known as Quantitative Easing or Q.E.

There are two important considerations revolving around Q.E. programs.  First, the Fed is currently simultaneously involved in two Q.E. programs totaling $85 billion a month.  Considering that we are more than 4 years into an “economic recovery” the need for such liquidity injections is very telling about the real strength of the economy.  Secondly, each program has had a diminishing rate of return as shown in the combined chart below.

fed rally

Hyperinflation In Action: Beer For Bag Of Cash