Inflation Is Definitely Coming Down – But Is Likely to Stay Well Above the 2% Fed Target

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Unleash Prosperity Hotline
Issue #718
02/23/2023
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1) Inflation Is Coming Down – But Likely To Stay Well Above The FED's 2% Target
We’re asked every day by readers where we think inflation is headed. All we can do is report to you the market’s most important forward-looking indicators of prices. Right now, they’re all pointing in the direction of inflation falling to the 3 – 5 percent range in the months to come. Remember, we were the ones who last summer accurately forecast an inflation retreat. Here again, is an update on the inflation indicators we think are the best predictors:
* Commodity Prices - They’ve come down from their highs last summer and have remained steady for the past six months. Since the early summer of 2022, the CRB index has fallen by about 15%. No sign of inflation here.

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* Gold Price – Gold is known as the ultimate hedge against inflation. During the 1970s gold prices skyrocketed by almost 10x as inflation soared from 2 to 13% under Nixon, Ford, and Carter. The gold price has stayed fairly steady at a range of $1,800 to $1,950 an ounce for the past year. Since the start of the year the price has been flat and over the past two weeks the price has fallen from $1,950 to below $1,850. (Might be a good time to buy gold!) For now, there is no hint of inflation in the gold price.

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* Money Supply - Regular readers know the story here. During the pandemic in 2020 and 2021, the money supply exploded (which unleashed inflation) but over the past year, M1 growth has been flat and slightly negative. Of course, there is still a huge excess of money sloshing around in the economy from the 2020 avalanche of dollars and runaway government spending.

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* TIPS Spread – The best market indicator of inflation is the 5 or 10-year Breakeven Inflation Rate on inflation on a government bond. You can see that rate fell from 3.6% this time last year to 2.6% now. But beware: over the last six weeks the rate has risen from 2.1% to 2.6%.

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All of this suggests to us that inflation is still a lingering threat, but the worst is well behind us – for now. Congress can help by cutting $1 trillion out of government spending.

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2) Arkansas Goes For The Gold On School Choice
We are marshaling all of our resources and influence to make real school choice a reality in 5 to 7 states this year. We mentioned the other day the positive outlook in the two largest red states: Texas and Florida.

Keep an eye on Arkansas Governor Sarah Huckabee Sanders, who’s pushing what she calls “the most far-reaching, bold conservative education reform in the country.”

The centerpiece of her reform is universal education savings accounts. Here is an infographic from the governor's office that summarizes an excellent plan:

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3) Can Oregon Counties Secede To Join Idaho?
The attempts by some rural residents of deep blue states to merge with more simpatico states on their border shows a big sign of their frustration and a serious commentary on how misgoverned some states are.

Oregon’s 11 most eastern counties are furious that “woke” Portland and the university town of Eugene dominate the state’s politics (Republicans have not elected a governor in 40 years). They say their communities are shortchanged and ignored. Every one of the 11 counties involved has passed referendums calling for a merger with neighboring Idaho.

Last week, the Idaho House of Representatives passed a nonbinding memorial calling for formal talks between the Idaho and Oregon legislatures to discuss the merger.

Oregon Sen. Dennis Linthicum of Klamath Falls says his colleagues will want to ignore the move, but they do so at the risk of completely alienating eastern Oregon.

For her part, Idaho state Rep. Judy Boyle says there are practical reasons for her state to back a merger. She says it could reduce the volume of illegal drugs coming into her state from Oregon, which has abolished many of its narcotics laws.

Idaho’s Democratic House Minority Leader Ilana Rubel says the idea is crazy and called it “self-segregating by ideology.”

Yes, that’s exactly what is happening in America. The people in rural eastern Oregon are outvoted by the woke progressives in Portland - who have adopted inane crime, homeless and tax policies almost intentionally designed to drive its middle class as far from the madness of Portlandia as they can get.

For the record, we are all for redrawing state lines so that citizens have self-determination and can escape from progressive tyranny.

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4) Almost No One Believes The Mainstream Media Anymore
Gallup and the Knight Foundation have been taking the public’s pulse on attitudes toward the media for years. But they’ve never seen anything like the collapse of trust they found in their new survey of over 5,000 Americans.

Only one-in-four respondents agreed with the statement that "most national news organizations do not intend to mislead, misinform, or persuade the public.” Half of Americans now believe national news organizations intentionally mislead, misinform or persuade the public to push a particular agenda.

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And it’s not just Republicans who have adopted the most negative views of the media. An astonishing 55% of political independents say there is a great deal of political bias in news coverage.

Here’s our take: the reason people have come to believe the media is intentionally trying to deceive us is…because they are. Consider the major stories of the last several years: Russia collusion hoax, Covid lies, Hunter Biden laptop (not a hoax), "cleanest election ever." Need we go on?

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5) Headline Of The Day
Speaking of prominent media lies, how about the myth that masks saved lives during Covid? Their impact on the spread was tiny. We applaud the New York Times for publishing this Op-Ed shattering the enduring masks myth. Six months ago this piece would have been "spiked” as “dangerous misinformation.”

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6) This Title Won’t Work

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