What Is Inflation?


June 29, 2022

  • the dollar continues its winning streak
  • Lola says the rupee is doomed! 

Good Day… And a Wonderful Wednesday to you! I had a dear reader send me a note yesterday, telling me that she didn’t care for my personal stories at the start of each letter.. I thought, hmmm. Maybe I should back off those stories at the start, and then I thought better and said, “it’s my letter, and I’ll write it the way I feel like writing it!! I know there are times I get to deep into what’s going on with me, but shoot, I began writing this letter, with the thought that I was sitting at your kitchen table, and talking to you… I think I still incorporate that thought, all these years after the first Pfennig was written! So… My beloved Cardinals won again last night VS Miami, and finish off their homestand tonight. Good friend, Duane, was back in town and watched the game with me outside on a beautiful evening. I was remiss in not mentioning that yesterday was also the wedding anniversary of my darling daughter, Dawn and her husband Jerry! !9 years ago I walked Dawn down the aisle… Man, time flies by! 10CC greets me this morning with their song: I’m Not In Love… The girls on the trade desk used to kid Mike Meyer and say that was his song…

Well… the dollar buying resumed in a big way yesterday, the DDXY dollar index gained 4 index points on the day, and that represented big gains in the dollar. The euro lost about ½-cent, to the dollar, and the rest of the currencies fell in line behind the euro… Gold lost $2 on the day and Silver lost 31-cents to the dollar… Gold closed at $1,821.40, and Silver closed at $20.94.. The BBDXY closed up at 1,258.67… The price of Oil was steady Eddie, trading at $111, and bonds got bought again for some unknown reason, which indicates to me that there was more Fed/ Cabal/ Cartel buying, but they won’t tell you that…

A dear reader read what I wrote yesterday about the Fed’s Balance Sheet and sent me this reading from their website about the balances… check this out:




See what I was talking about? The Fed’s Balance Sheet grew in the first two weeks of June, when they were supposedly out of the bond buying business!

What a bunch of lyers! Lyer, lyer, your pants are on fire! And they thought they could slip that one right on past us? Where’s their credibility now?

In the overnight markets last night…. The dollar was bought some more… The BBDXY gained another index point and trades this morning at 1,259. Gold is up $7 to start the day today, and Silver is up 17-cents… Up one day, down the next, that’s been the pattern with Gold & Silver in recent weeks… No breakout of either moving upward or downward… The price manipulators seem to be happy with the $ 1,800 figure for Gold… I wonder why?

The price of Oil gained another $2 overnight, and trades this morning with a $113 handle… Summer driving season is upon us, and after 2 years of being cooped up at home, people all over the planet are looking to get away, and with airline flights so iffy, as to whether they will actually go through with the flight, people are turning to driving… And the Oil traders know that, just like I do, and so with Oil supplies weaker than they’ve been in years, the price of Oil goes higher, and that means the price of gas will also be higher, just in time… UGH!

I don’t know if you’ve noticed or not, but the Swiss franc has really been on a tear ever since the Swiss National Bank (SNB) hiked rates about 10 days ago… Remember the article that said that the franc was now a better hedge for inflation than Gold? Crazy thoughts for sure… But even though the franc is still a negative deposit rate currency, it’s on the rally tracks… Again, Crazy thoughts…

I have to talk a bit about the Indian rupee… a couple of months ago, the Indian Gov’t threw their backing of Russia into the ring, and every since then, the rupee has been on the selling blocks, daily… Goldman Sachs, aka Lola, recently announced that they believe the rupee will weaken to 80 (it’s currently at 78), and we all know that “what Lola wants, Lola gets”… So, if you own rupees, I suggest that you batten down the hatches, crawl under rock and wait for the hurricane to pass…

Speaking of hurricanes… Since I’ve become a part time resident of S. Florida, I have taken quite an interest in hurricanes… And or explanation of what I see going on in the U.S. right now, I’ll use a hurricane to explain… The first wave of bands from the hurricane has already made landfall in the U.S., and right now, we’re experiencing the calm of the eye of the storm… But the backside of the hurricane is what holds the wallop and that’s what’s ahead for us here…

And remember me telling you about the Bank of Japan was begging anyone to join them in a coordinated effort to stop the yen from sliding further against the dollar? Well, he’s not the only Asian Central Banker looking for help… This from Bloomberg.com this morning: “After years of building their foreign-exchange reserves, central banks in Asia are tapping into their stockpiles to bolster their weakening currencies against a rising US dollar.”

China is the key here folks… how will they come out of the “zero covid” economic shutdown… The good news for the Chinese is that there were zero new cases of Covid in Shanghai, and Beijing last week… I just don’t’ see how their shutdown is going to help the Chinese or the rest of the world, that depends on trade with China… And the Asian countries along with their respective currencies are going to suffer the most…

Just for the record… I want to make sure you all recall me telling you that Japan was a “basket case”, and they continue to be just that…

The U.S. Data Cupboard yesterday had the Home Price Index for May, of which I said that the most recent prints had shown home prices slipping and that I didn’t think that would change in May, and it didn’t with Home prices slipping -.2%… And Consumer Confidence slipped below 100 at 98.7 in May… This data is really stupid, but the analysts watch it, so I must do so too… I say, it’s stupid because it’s really just a pulse of the stock market, because all these people they survey, think the stock market is the economy… And the other reason is that they’ve never called me to survey me!

Today’s Data Cupboard has the final revision of 1st QTR GP… I say unless this revision shows GDP was positive, instead of being negative, then there’s no reason for the revision! But the gov’t bean counters have to have something to do in between quarterly updates of GDP, so they do these revisions!

To recap… The dollar continued its winning streak of getting bought yesterday, and overnight… Gold was down yesterday, up today, and Chuck thinks that the price manipulators are happy with Gold around $1,800…. But don’t ask him why that is, because he doesn’t know! HA! Lola says that the rupee is doomed, and what Lola wants, Lola gets! And Chuck talks about hurricanes this morning…

For What It’s Worth… Long ago in a galaxy far away, I used to attend quarterly meetings with a long time associate of Mark Twain Bank, who had become an economics professor at St. Louis University… I used to argue with her, nicely I might add, that money supply IS inflation… She didn’t quite see it that way… Well, Doug Casey sets the record straight for us in today’s FWIW article that can be found here: https://internationalman.com/articles/the-truth-about-how-governments-will-use-inflation-to-redistribute-wealth/

Or, here’s your snippet: “ Inflation is one of the most misused words in the English language. The original and correct meaning of inflation is an increase in the money supply.

Over the years, the government and their court economists in academia and media have attempted to redefine inflation to mean an increase in prices.

Since its founding in 1828, Webster’s Dictionary had always defined inflation as an increase in the money supply. Then in 2003, it changed the definition to mean a rise in the general price level.

The difference might seem subtle, but it’s not. It’s a deliberate deception.

Redefining inflation confuses cause and effect, and that is exactly the point. Price increases do not cause inflation. Instead, an increase in the money supply—inflation—causes prices to increase.

Defining inflation as a rise in prices gives people the impression that inflation is a natural market phenomenon when it is not. It also conceals who is causing this unnatural occurrence to happen. The direct victims of this swindle are, therefore, confused about what is happening.

It would be like redefining robbery to mean “a mysterious property loss,” as if there was no robber.

The reality is that inflation is 100% a political phenomenon.

Neither the local grocery store, the pharmacy, the restaurant owner, nor foreign scapegoats are responsible for inflation. The government—with its monopoly control over the currency—is.

That’s why there’s never been a gold hyperinflation.

Governments inflate the currency to generate more money than they otherwise could through direct taxation and issuing debt. Inflation is an indirect, hidden, and insidious tax that the government takes from the populous without its consent.”

Chuck again… Well, Lisa, what do you have to say about that? HA! I always appreciated Lisa spending time with us to explain economics, and I’ve always had this episode in the back of my mind, to bring up again at some point in the future!

Market Prices: 6/29/ 2022: American Style: A$ .6897, kiwi .6236, C$ .7784, euro 1.0525, Sterling 1.2157, Swiss $1.0511, European Style: rand 16.0939, krone 9.7895, SEK 10.1516, forint 375.08, zloty 4.4545, koruna 23.5065, RUB 52.99, yen 136.49, sing 1.3888, HKD 7.8473, INR 78.96, China 6.6952, peso 20.09, BRL 5.2191, BBDXY 1,259.21, Dollar Index 104.51, Oil $113.20, 10-year 3.16%, Silver $21.01,
Platinum $939.00, Palladium $1,996.00, Copper $3.86, and Gold… $1,827.16

That’s it for today… I use the wifi signal to cast the screen from my iPad to the TV outside so I can sit outside and watch my beloved Cardinals… that wifi signal has been really buggy lately, I can only think that something is interfering with the signal… I envision some nerdy geek, in his parents basement, causing the bugginess and laughing about it! “And here’s the pitch”, and that’s when he pushed a lever and the picture freezes up! HA! I had technical difficulties this morning, so the letter is later than usual, but late is better then never, right? Day 5 of being all by myself… Jimmy Buffett takes us to the finish line today with his song: Boat Drinks… I hope you have a Wonderful Wednesday today, and please remember to Be Good To Yourself   

Chuck Butler