CPLIE - The Exponential Inflation Mega-trend

Economics / Inflation Nov 21, 2022 - 10:13 PM GMT

People need to learn to forget about graphs such as this (Annual percentage change in CPLIE) -

And instead focus on graphs such as this (10 Year change in CPLIE) -

Which as far as I am aware currently I am the only one posting this measure of Inflation. This graph far better illustrates where we stand in terms of the Inflation pain that is yet to come that will be hidden in the former graph, where the inflation pain to date is a mere pin prick of what is to come! If you stare at the annual percentage graph then all you will see is a series of peaks and troughs, that on the surface will not look so bad, i.e. it will appear that Inflation is being brought under control as successive peaks will tend to be lower than the preceding peak but what most will miss including ALL academic economists is the EXPONENTIAL NATURE OF WHAT WILL COME TO PASS i.e. a COMPOUNDING of the inflation pain! With the headline rate stubbornly refusing to fall to anywhere near the Bank of England's 2% target because when inflation was LOW one was not too bothered about holding onto a significant amount of cash, especially in times of economic and market uncertainty. However, in times of persistently HIGH INFLATION the last thing one wants to do is to HOLD ONTO CASH! What this means is that the VELOCITY OF MONEY WILL INCREASE in response to which there is little that the governments can do other than to trigger an economic depression, massive job losses to crush demand.

This is where we currently stand at the very beginning of this decades long exponential inflation mega-trend where once the dust settles, the 10 year Inflation graph of the 2020's will resemble that of the 1970's!

And you lucky folk continue to have several years advance warning of what is to come so as to be able act to LESSEN the INFLATION PAIN that is yet to come for all we can do is to limit the damage that will be done as it is difficult to preserve let alone grow ones wealth at a time when the economic pie is shrinking in real terms.

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By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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