In my latest blog post, I dig into the thorny issue of America's current inflation mess, taking cues from Ronald Reagan's take back in 1980. I spotlight the vicious cycle where more spending and borrowing by the government only fuel further inflation. The situation's pretty dire, with recent data showing inflation rates veering way past the Fed's 2% target, and most Americans are feeling it. The economy and inflation are emerging as hot-button issues for the 2024 Presidential race. I also touch on how Biden administration policies, particularly around energy, are contributing to the problem.

The U.S. government debt has reached nearly $33 trillion, fueled by extensive issuance of Treasury securities to both fund deficits and roll over maturing securities. Amid this, the Federal Reserve has raised interest rates, making short-term Treasury bills cost around 5.5% in interest to the government, while longer-term borrowing rates hover above 4%. However, these new, higher interest rates only apply to newly issued Treasury securities; those issued years ago continue to carry their original, lower interest rates. Consequently, the average interest rate on all government debt has gradually increased from 1.57% in February 2022 to 2.84% in July, and it's projected to continue rising.

In a recent interview with Bloomberg, Cleveland Federal Reserve Bank President Loretta Mester expressed concerns over the potential for inflation to remain above the 2% target for an extended period. Mester indicated that, although economic growth has been stronger than expected and there are signs of inflation coming down, the data is still insufficient to be certain. She also mentioned that higher long-term rates would put downward pressure on inflation.

During their two-day July meeting, Federal Reserve officials expressed worry about the pace of inflation and hinted at potential future rate hikes unless conditions change. The discussions led to a quarter percentage point rate hike, which markets expect to be the last one of the current cycle. However, the minutes showed that most members believe the fight against inflation is far from over, requiring potential further action from the Federal Open Market Committee.

Perhaps one of the most bizarre recent developments in economic news has been the attempt by establishment media (and the White House) to declare US inflation “defeated” despite all the facts to the contrary. Keep in mind that when these people talk about inflation, they are only talking about the most recent CPI, which is supposed to be a measure of current inflation growth, not a measure of inflation already accumulated. But, the CPI is easily manipulated, and focus on that index alone is a tactic for misleading the public on the true economic danger.

Once upon a time, there were two investors, one named Fred and the other named George. Fred was a believer in the perpetual market boom theory. He was a risk taker, known for his quick trading decisions, always chasing the hottest trends. He firmly believed that no matter how dire the economy got, the Federal Reserve would always be there to bail him out.

Economic issues are some of the most politically abused issues often because the data politicians exploit is easy to present out of context. The vast majority of the public doesn’t spend their time immersed in the intricacies of monetary policy, unemployment stats and the processes of inflation vs deflation. They hear a soundbite on the news or social media once in a while, assume it must be true and then go on with their day.

Every facet of the economy, from consumer sentiment to government policies, plays a pivotal role in shaping the landscape of investment market cycles. By closely observing each economic element, we can gain a holistic understanding of underlying forces, potential risks, and emerging opportunities.

During historic times, patience plays a crucial role in navigating the uncertainties and complexities of transformative events. It is essential to recognize that significant shifts and disruptions take time to unfold and resolve. Patience allows individuals and businesses to make informed decisions, adapt to changing circumstances, and weather the storms that often accompany historic periods.

We are being told things are just rosy, people are working lots of jobs and the economy is doing quite well. Maybe there is more cocaine in Washington than the stuff recently discovered in the White House.

What in the world does Disney have to do with your retirement assets? If you are like many people, you may invest with BlackRock thinking their track record earns your respect. However, things change.

It seems everyone has an opinion about the important things in life, and often those opinions don’t line up with reality. Some “experts” would have you believe that things are fine and dandy, and we are on a solid road to a bright future.

The market continues to doubt the Federal Reserve's commitment to controlling inflation, despite the Fed's revised interest rate estimates from 5.1 percent to 5.6 percent by year's end. The market's skepticism is also reflected in the Bloomberg consensus forecast, which shows rates remaining where they currently are by the end of the year. This skepticism persists despite the Fed's demonstrated commitment to fighting inflation, as shown by its consistent rate hikes, even in the face of potential recession.

Currently, our economy is facing a challenging period characterized by several key indicators. GDP growth, a primary measure of economic health, is stagnating or declining, indicating a slowdown in the production of goods and services. Consumer spending, a vital engine of the economy, is down due to lower consumer confidence and reduced disposable income. Inflation is high due to years of cheap money from the FED.

The rise in mortgage rates has significantly affected the spring selling season, typically a period when sales and prices increase. Applications for mortgages to purchase a home have fallen for the third consecutive week, reaching their third-lowest volume since 1995, according to the Mortgage Bankers Association.

The discrepancy for the first quarter is unusually large. According to Harvard economist Jason Furman, it is the sixth largest difference since 2003.

The perception among U.S. households appears to be more aligned with reality than Wall Street's. Recent reports indicate that consumer expectations for inflation over the long term are increasing. The May preliminary reading from the University of Michigan survey of consumer sentiment showed consumer expectations for inflation over the next five to ten years moved to 3.2 percent, exceeding its previous range of 2.9 to 3.1 percent.

"Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell". - Sir John Templeton

The Federal Reserve is losing credibility and trust amongst the public and financial markets due to its recent policy decisions. The Fed's primary mandate, which is to promote stable employment and control inflation, is not being fulfilled. The Fed's policies, such as quantitative easing and low-interest rates, have not only failed to control inflation, but have also contributed to income inequality and economic stagnation.

The US dollar (USD) is currently the world's dominant reserve currency, followed by the euro (EUR), the Japanese yen (JPY), and the British pound (GBP). Being a reserve currency confers certain advantages to the issuing country, such as lower borrowing costs, stronger demand for its financial assets, and the ability to exert greater influence over global economic policy.