Courtesy of Michael Pento at Euro Pacific Capital
Ok, so I am aware that food prices are something the Fed thinks consumers don’t have to worry much about. Remember, Bernanke has assured us that inflation is going to be transitory—but only if we enter a deflationary depression. However, if you like to drink coffee, the J M Smucker company has done something once again that both you and Mr. Bernanke should pay attention to. The top U.S.packaged coffee maker raised prices on most of its coffee products by 11% due to steep bean costs. The increase was the fourth of its kind in a year. I guess Smucker’s didn’t get the memo about food prices being irrelevant. Besides, we have been assured by the Fed that crude goods prices are about to drop, so why should they bother raising consumer prices? Maybe it has something less to do with promises from our central bank and more to do with something called profit margins.
Meanwhile, the evidence of stagflation continues to pile up. The Richmond Federal Reserve Bank’s manufacturing sector activity survey for May had this to say about “the recovery”: Manufacturing activity in the central Atlantic region paused in May, after expanding during the previous seven months. The index of overall activity was pushed into negative territory by weak readings for shipments and new orders, while employment growth held steady. Other indicators suggested additional softness. District contacts reported that capacity utilization turned negative and backlogs fell further, while delivery times grew more slowly. In addition, manufacturers reported an uptick in finished goods inventory growth. Survey measures of current prices revealed that prices of raw materials grew at a rapid pace, and finished goods grew at a slightly quickening pace in May. The survey slipped to -6 in May from +10 during April.
Prices going up and growth headed down. How long can the Fed feign an interest to ending quantitative counterfeiting?
