Inflation May Have Been Much Higher Than We Thought
To investors, Former Secretary of the Treasury Larry Summers put together a Twitter thread back in February which was widely ignored. In his comments, Summers makes an argument that increasing interest rates drastically accelerated the true inflation rate experienced by an average citizen. He specifically calls out this increased inflation was missed by the current CPI measurement. For example, Summers argues the following:
Summers goes on to show that citizens are very worried about the increasing borrowing costs.
The former Secretary of the Treasury was not looking to simply complain though. He and his colleagues created a new methodology to calculate CPI in an attempt to get closer to the truth about what has been going on.
This brings us to the main point that Summers wanted to make — inflation was substantially higher than what the official metric showed in the last few years.
Calculating inflation is nearly impossible to do because every person experiences the phenomenon differently. We live in different areas. We buy different goods and services. The uniqueness of the problem makes deriving a single, accurate answer even harder. But one thing is clear — everything has been getting more expensive. Larry Summers’ calculation has inflation peaking at 18%. The Bureau of Labor Statistics had inflation peaking just over 9%. That is a wide gap. Regardless of an exact number, it should be clear that interest payments and other interest rate-related costs should be factored into what people are living through right now. The headline CPI number may have come down, but these interest payments have no relief in sight. Don’t expect good decisions to come out of the Federal Reserve as long as they are asked to evaluate bad data. Hope you all have a great day. I’ll talk to everyone tomorrow. -Anthony Pompliano Annelise Osborne is the author of a brand new book, “From Hoodies to Suits: Innovating Digital Assets for Traditional Finance.” She also is the Chief Business Officer at Kadena. In this conversation, we talk about a brand new trend where Wall Street is starting to interface with the hoodies, what the suits are interested in, where they are putting their money, what the hoodies are doing, banks vs. bitcoin, and more. Listen on iTunes: Click here Listen on Spotify: Click here Why Wall Street Is All-In On Bitcoin & CryptoPodcast Sponsors
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