ECONOMIC UPDATE: It's Dragflation... and it's Going to Get Worse
As we have long noted, the sanctions imposed on Russia by the United States and NATO punished the people, and not Putin
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The Street is surprised, but Trends Journal subscribers aren’t.
Ready for this “shocking” Bloomberg headline? “Canada inflation quickens to 4 percent, driven by higher gas prices.”
Since the beginning of this year, we had forecast that the OPEC oil cartel would do all it could to boost oil and gas prices and would bring Brent Crude to around $100 a barrel. As we go to press, it is at $95.25 a barrel.
And remember, earlier this month, because inflation was allegedly tamed, with core inflation at 3.5 percent but Canada’s gross domestic shrank 0.2 percent in the second quarter, the Bank of Canada (BoC) held its key overnight interest rate at 5 percent.
Credit card interest rates are more than 20 percent… the highest rates since 1994, when the Feds started to track them. Yes, 20 percent interest rates - at loan shark levels - is now the way of the Bankster Bandits in control of governments that permit these gangland rates.
Like the other central banks of the West, the BoC keeps saying it will do all it can to bring the inflation rate down to 2 percent, a fake number the Banksters made up in 2012 during the Great Recession.
Again, we had forecast that following the COVID War, a time when politicians locked down nations and artificially pumped up dying economies with trillions of dollars of fake money and record-low interest rates, countries would suffer from Dragflation: declining economic growth and rising inflation.
It’s right in front of the world’s eyes but despite our sending out tens of thousands of press releases to the mainstream media, our forecast is ignored.
And while it is ancient history for most that don’t have a clue of what in the world is going on, Germany, which has the fourth largest economy in the world and is #1 in Europe, is now in recession.
The International Monetary Fund and European Union are forecasting more economic shrinkage this year and next, and much of it is a result of German politicians who joined the U.S. to support Ukraine in its war against Russia.
Again, for Trends Journal subscribers this is old news but is now just making the news.
As reported by the Associated Press, Christian Kullmann, CEO of major German chemical company Evonik Industries AG, noted that “The loss of cheap Russian natural gas needed to power factories “painfully damaged the business model of the German economy. We’re in a situation where we’re being strongly affected—damaged—by external factors.”
The AP said after Russia cut off most of its gas to the European Union, it spurred an energy crisis in the 27-nation bloc that had sourced 40 percent of the fuel from Moscow.
And while gas prices are double what they were in 2021, AP got it wrong, is lying, selling propaganda or plain stupid when they say, “after Russia cut off most of its gas to the European Union.”
TRENDPOST: It was the sanctions U.S. President Joe Biden and his allies put on Russia that “cut off most of its gas to the European Union.”
The day the Ukraine War began, on 24 February 2022, Biden said, “Putin is the aggressor. Putin chose this war and now he and his country will bear the consequences.”
“If we don’t move against him [Putin] now with these significant sanctions, he will be in Poland,” Biden said and declared that Putin “has much larger ambitions than Ukraine “If we don’t move against him now with these significant sanctions, he will be emboldened.”
Living up to his sanctions promise, when the White House announced a ban on Russian oil imports in March of 2022, oil prices in the U.S. hit $130 per barrel, their highest levels since 2008.
And like AP who blamed the Russians for high oil prices rather than the sanctions imposed that prohibited the U.S. and its allies from buying Russian oil, Biden also lied saying that “Democrats didn’t cause this problem. Vladimir Putin did. Putin’s gas tax has pushed prices higher.”
Yet, there was little or no denunciation for this moronic statement, since gas prices were rising before the Ukraine War, and Biden, by his own admission, had made a bad situation worse.
In fact, in response to Biden’s claim, Putin said, “Supplies of Russian oil, say, to [the] American market do not exceed 3 percent. This is a negligible amount. We have absolutely nothing to do with it. They just hide behind these decisions to deceive once again their own population.”
TRENDPOST: As we have long noted, the sanctions imposed on Russia by the United States and NATO punished the people, and not Putin, nor would sanctions deter Russia in its war against Ukraine, but America’s narrative was the opposite.
To illustrate the arrogance and duplicity of the Moron Gang in charge of destruction, on 11 February 2022, two weeks before Russia’s invasion of Ukraine, White House National Security Adviser Jake Sullivan said, “the president believes that sanctions are intended to deter.”
And this was a New York Times headline in March 2022: “With Sanctions, U.S. and Europe Aim to Punish Putin and Fuel Russian Unrest—The Biden administration and European officials are crushing the Russian economy and stirring mass anxiety to pressure President Vladimir V. Putin to end his war in Ukraine.”
That week, President Joe Biden warned Americans that not only will Russians pay the price for their invasion of Ukraine, so too will Americans bear the pain of his economic sanctions.
“There will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: the costs we are imposing on Putin and his cronies are far more devastating than the costs we are facing,” Biden said.
The Trends Journal has reported extensively on the economic impact that European sanctions on Russia over its invasion of Ukraine had on economies throughout the continent, but Germany has suffered due to its reliance on Russian energy to keep its economy rolling.
Last week, the European Central Bank raised interest rates by 25 basis points to 4 percent. With nations such as Germany already in recession and the summer travel season over, we forecast that the major European economies will hit Dragflation in 2024.
High Rates = Low Growth
And now there are expectations that the U.S. Fed, which meets today and tomorrow, may raise interest rates to slow down inflation. According to a Financial Times poll, more than 40 percent of academic economists surveyed expect two or more 25 basis point rate hikes.
Yet, even at their current 5.25-5.50 benchmark level, the high interest rates are taking their toll. As we have noted, trillions of dollars are being pulled out of equity markets and going into money market funds and U.S. Treasuries where investors are getting some 5 percent interest with little risk.
Another downside of high interest rates has hit the U.S. housing market where demand for mortgages hit a 27-year low because the 30-year fixed-rate mortgage is, according to Mortgage News Daily, averaging 7.22 percent.
Along with the high-interest rates, because of high inflation, WalletHub reports that U.S. consumers took on $43 billion in additional credit card debt in the second quarter of this year. And now credit card interest rates are more than 20 percent… the highest rates since 1994, when the Feds started to track them.
Yes, 20 percent interest rates at loan shark levels, is now the way of the Bankster Bandits in control of governments that permit these gangland rates.
And thanks to the spending spree by the crime syndicate running the United States, national debt, according to yesterday’s report by the Treasury Department, is now $33.04 trillion. Forty years ago it was around $900 billion. Thus, the higher interest rates rise, the more it costs to service the debt.
According to the Committee for a Responsible Federal Budget, interest payments on the national debt will be the fastest-growing part of the federal budget over the next thirty years. Its president, Maya MacGuineas stated, “The United States has hit a new milestone that no one will be proud of: our gross national debt just surpassed $33 trillion,” and warned that the “Debt held by the public, meanwhile, recently surpassed $26 trillion. We are becoming numb to these numbers.”