Inflation Expectations - Not Looking Good

The definition of inflation in classic economics was historically an increase in the Money Stock (system currency).

This currency inflation leads goods price inflation with a time lag to the prior pulse of currency creation.

Keeping this definition of inflation in mind and using the 5-year forward inflation expectation rate that is calculated as the difference between the forward nominal and real yield on Treasury bonds - we can see that all is not well in the central planners’ world.

The above graph of M2 (and the True Money Supply graph even more so) shows us the enormity of the continuing price inflation wave built into the economy with the loose money policies of the monetary central planners.

Consider also the danger the sudden monetary contraction, that we now face, represents to the debt-ridden economy, financial markets, and banking system.

Best regards,

David Jensen