Public Being Squeezed As Credit Card Rates Hit 19.4%, Plus This Is Not The End Of The Great Inflation

The public is being squeezed as credit cards rates hit 19.4%, plus this is not the end of the Great Inflation.

This Is Not The End Of The Great Inflation
December (King World News) – Otavio Costa:  As inflation decelerates investors will think it’s the end of it.

Not my view. This is a structural problem caused by secular forces:

* Wage growth
* Commodity shortages
* Reckless fiscal spending
* Deglobalization

Inflation develops through waves, we just saw the 1st one.

Inflation Continued On A Heightened Trajectory In The 1970s Minus Some Brief Deflationary Mini-Waves

The Ticking Time Bomb
Peter Boockvar:  “Straddle the line in discord and rhyme” sang the recently inducted Rock n Roll Hall of Fame member Duran Duran in Hungry Like the Wolf and I think that line is exactly what the Fed is now dancing around with the fed funds rate taking another step closer to 5% today. I say this because of the size of the debt on which these rate increases are taking place against.

You’ve heard me for a while now talk about the ticking time bomb that is floating rate debt for some, and I include two charts here. One is total business debt as a percent of GDP which is at 77%, a record high if we don’t include the Covid spike…

… and the other from yesterday’s NFIB report that shows the average interest rate being paid by small business.

That latter chart is predominantly floating rate debt being paid by mostly small and medium sized businesses tthat is resetting higher. We know many bigger companies are more insulated because they termed out their debt having access to the capital markets but when that debt comes due in coming years, higher rates for longer will have its sting.

Add this to my belief that while inflation will continue to fall sharply from here, the new normal after it settles out will be 3-4% for a variety of structural factors, particularly the end of cheap labor, the death of just in time inventory combined with the always persistent pace of services inflation. The days of 1-2% and deeply negative REAL interest rates is over, for a while at least.…….MORE HERE

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