June 2, 2020
With $11 trillion of global deficit spending in response to the pandemic, and trillions of dollars of new money creation from global central banks, we've talked a lot about the wave of inflation that's coming (possibly very hot inflation).
Let's take a look at some related charts …
Let's start with wages/income, which is rising (thanks to hazard/essential worker pay increases and Federal unemployment subsidies).
On Friday the month-over-month change on personal income for the month of April was +10.5%. Here's how that looks on a chart relative to the past twenty years …
We’ve yet to see the impact of this excess money that’s sloshing around the economy in everyday consumer products — but it’s coming (i.e. higher prices).
Where is inflation showing up now – the early warning signals?
> Gold — Cash has already been devalued against gold by about 13% since the Fed started its Pandemic response on the evening of March 15th (two and half months ago).
> Stocks — Cash has been devalued against stocks by about 14% since the Fed’s first response.
> Bitcoin — It takes 74% more dollars to buy a bitcoin than it did just two and a half months ago.
> Real Estate — The median home price is up 6.5% since the Fed’s initial response.