Interest rates are not "imbedded" with inflation. Interest rates are determined by market supply and demand. When governments decidethey can buy as many bonds as necessary in order to keep the interest rates lower, then the market is not functioning as an indicator of value. So what is the common man supposed to do? In great flocks they are buying bit coin and stocks, the biggest country supporting Bitcoin is China where 65% of all bitcoins are produced. It was not coincidental that TESLA purchased 1.3 billion dollars of bitcoin and is counting on the Chinese market for it's sales.
I think it is simplistic to not contemplate why one of the largest market cap companies in the world issues 2 billion in stock and uses one point three billion of that to buy bitcoin and since has doubled the value of the bitcoin held, that something is going on other than retirees reduced consumption. Bonds are becoming openly viable to mock as an investment by any company, since they hold no interest rate they are actually functioning as cash holdings, something to be held for short term until a risk asset can be purchased.
Another interesting fact, if you try to buy a silver eagle in hard form you will pay $35 per ounce for the metal itself at wholesale, even though paper sliver is going for $27. So silver does not have that much inflation over the past year unless you are someone who actually needs the silver.
The CRB index is about to break a 12 year trend line from the decline in 2008 and has risen nearly 100% since "stimulus" payments gave hold.
Here are the current YTD price increases in some commodities:
Crude Oil USD/Bbl 25.99%
Natural gas USD/MMBtu14.34%
Gasoline 28.84%
Propane USD/Gal 41.86%
18,000 tons of copper 18.26%
Lumber: 15.42%
Cotton: 15.54%
Sugar: 17.17%
Lithium: 45.1%
Tin: 31.41%
Cobalt: 55%
Corn: 12.76%
Rice: 4.94%
Hog Prices: 20.42%
CRB Index: 12.4%
US Houses Year over Year 10.97
The idea that a 30 year bond trading at 2% is an indication that inflation is under control is an economic self fulfilling forecast of economists who view controlling the interest rates as equivalent to controlling "inflation" and allowing for economic activity to maintain as "debt"
Thanks for the good list. Reading through it, it seems out of context without showing where these prices were pre-Covid. Maybe 1/1//20 would be a better starting point than 1/1/21. Second, there are contributing or even dominant factors for most of them, which are unique to this moment, namely trade wars, weather and early signs of the 6% GDP growth that respected economists, including Goldman Sachs’, are predicting for 2021 as we rebound from 2020.
A lot of the agriculture products above, including lumber, are subject to our lingering trade wars. For example, one of the reasons we’re paying more for lumber is because our imports from Canada have been subject to tariffs.
https://nahbnow.com/2020/12/commerce-department-cuts-lumber-tariffs-from-20-to-9/
1) These tariffs have also contributed, along with 2) record, fantastically low interest rates for mortgages and refinances, together with 3) explosive Covid-driven demand to larger or new houses in the work-from-home era, to the run up in housing costs on your list.
How much of the energy cost increases are due to Texas energy production recently freezing up, which was apparently avoidable and due to poor weather planning on the part of Texas energy producers and regulators?
And how much of the energy and commodity price increases above are due to the economy simply coming back to life after a unique plunge in 2020?
That lithium prices are way up in the context of EV expansion, with GM announcing it will phase to EVs, should surprise no one.
I suspect there’s a lot more going on than the Fed and Congress’ actions to do their jobs and respond to a genuine crisis with many tax paying, voting citizens in dire need. YMMV but I’m taking the long view that the inflationary and deflationary factors unique to our times will sort themselves out, and am staying put.