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Cost-push inflation could break out (and a note on gold)
Before beginning the post a little context is in order. We (NFTRH) anticipated the current pause in long-term Treasury yields (one indicator of inflation) because pro-inflation sentiment became over-done in March and was due for a cool down; so said a contrarian view. This post discussing the likelihood of more inflation to come is not written by a one-way bias booster. It’s important for credibility to make these distinctions from the herds running with the daily news cycle.
The short-term contrary sentiment situation against the inflation view began with the Bond King’s media-touted short of long-term Treasuries (i.e. expectation of higher yields), per one of our best macro tools…
Boredom. I’ve written about it many times. I invariably describe it as more terrifying to me than death. I’m not exaggerating. The prospect of having nothing to do is miserable beyond belief to me. I do not idle well. I’m not going to relax. I don’t want to relax. I want to make things. And when I can’t make things, I lose my mind. Trust me, I’ve been losing my mind severely lately, and my grappling with the boredom demons has never been worse.
Of course, I don’t just roll around on the floor shrieking when I am in this state. I desperately try to find something productive or constructive to do. But sometimes there’s just nothing left, and I have to get creative. After all, one can sort the proverbial sock drawer only so many times. So I did something I hadn’t ever done before: I opened up my huge trunk of memories, and I sorted through it.
Let us begin with a thesis:scarcity breeds excellence, and abundance produces garbage.
I am compelled, naturally, to write about this topic thanks to yet another multi-trillion dollar federal boondoggle, this one in the form of the “once in a generation opportunity to invest” announced by the President. Of course, this statement implies that the federal government has been cautiously and conservatively watching every penny for years and now, at long last, it will finally loosen the purse-strings and actually spend a bit on the country. This is, of course, patent nonsense, as the $28 trillion in debt incurred by countless years of government waste, quite plainly attests.