When the U.S. opted to shut down its economy in 2020, it embarked on the single greatest mistake in policy history. Economies are not like…
by Graham Summers of Gains, Pains, & Capital
As I outlined yesterday, inflation has arrived in the financial system… and there’s nothing policymakers can do to fix it.
When the U.S. opted to shut down its economy in 2020, it embarked on the single greatest mistake in policy history. Economies are not like Netflix, you can’t just pause them for a while without doing MAJOR structural damage.
That damage has arrived in the form of supply chain issues and labor shortages.
Everywhere you look, the manufacturing and delivery of goods and services is taking weeks if not months longer than usual.
- Over 100 cargo ships are just sitting off the coast of California waiting to be unloaded by dock workers who have changed jobs or simply aren’t returning to work.
- The trucking industry has been decimated as the shutdowns resulted in many drivers retiring early. Throw in vaccine mandates, and you’ve got even fewer truckers hitting the roads and transporting much needed goods.
- Coal and energy resources are sitting in the earth, as coal workers and oil employees changed careers entirely or are refusing to return to work.
And on and on.
Meanwhile, demand for everything has come roaring back as Americans are keen to return to “normal life” after a year in lockdown.
Regular Demand + Fewer Goods and Services =HOT INFLATION
And get this… the craziest thing about this whole mess is that the same policymakers who created it, can’t do a thing to fix it.
The Fed, which has printed over $4 TRILLION to prop up the financial system can’t print new workers keen to return to work. Keeping interest rates at zero doesn’t make oil prices come down. And spending $120 billion on QE per month doesn’t result in cargo ships being unloaded and life returning to normal.
Similarly, the DC crowd, which didn’t just choose to crash the economy, but has spent over $11 TRILLION in stimulus (50% of GDP) over the last 18 months, has no idea how to fix the mess they made (aside from spending more money).
The Department of Energy Secretary, the highest official for the energy industry in the U.S. doesn’t even know how many barrels of oil the U.S. consumes per day. The Secretary of Transportation is on paternity leave during the single greatest supply chain crisis in decades. The President thinks releasing 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) over several months will lower gas prices… when the U.S. consumes 22 million barrels of oil per day.
It would be hilarious if it wasn’t so tragic. And the reality is that it has unleashed an inflationary storm that is giving investors a ONCE IN A LIFETIME opportunity to get filthy rich from government incompetence.
During the last major bout of inflation in the 1970s, smart investors locked in gains in the QUADRUPLE digits (1,000% or higher). And THAT version of inflation was the kind the Fed could easily stop!
So you can imagine the profit potential of this crisis today.