Money is one of the greatest illusions.
What governments and central banks do to money is change the underlying fundamentals without telling anyone.
The sneaky bastards are about to do it again. I’m a finance guy and I almost missed the change, so I can guarantee 99% of you miss it too.
Let me explain in simple English so you can profit from it.
The US government is going to change how inflation works
First, you have to understand the backdrop.
We’re going into a 2024 election. It’s hard for old mate Joe to get re-elected if the economy has gone to crap and everyone feels poorer.
As interest rates increase the pressure on households turns into a chokehold for young families. They’ll literally suffocate.
The US Federal Reserve isn’t going to stop raising interest rates. Why? They’re fighting a boogie man called inflation.
Inflation = Bad
Prices rise too fast so people feel poor. We can’t have that, now can we? So to also remain popular with the people and keep their jobs, the Fed Chairman Jerome Pow-Wow must act. So interest rates go up. Paying the mortgage becomes a huge pain the ass for Americans.
Joe Riden-High-Biden can’t scream at the Federal Reserve and tell them to stop hurting his voters — and he knows it. After all, governments and central banks are kept separate for a reason.
Joe might be an old man with a walking stick but he’s no dummy.
To save the election he must save the economy in secret.
Joe’s secret plan (that’s already happened)
What Joe and the government can do is change the way inflation gets measured. If the public inflation number is lower then the Federal Reserve has to stop raising interest rates.
Back in September 2022 the government, through the US Bureau of Labor Statistics, changed how inflation gets measured.
Nobody noticed except one finance expert, Neely Tamminga.
She wrote a tweet that screamed loud and clear what was about to go down. But nobody listened or understood.
On the 14th of February, when you’re out making love on Valentine’s Day, the calculation for inflation will change (how cutesy). The new inflation calculation will be effective for the January 2023 numbers.
How the inflation number will quietly change
- The 2022 inflation numbers were based off consumer consumption in 2019 and 2020.
- The 2023 inflation numbers going forward will be based off only 2021.
Here’s where things get creative. The inflation numbers are based off a basket of goods and services. This basket used to change every two years but now it changes every year.
The process of selecting what goes in the basket is highly subjective and open to manipulation to make inflation seem smaller than it is, so the public doesn’t realize how much of the inflation tax they pay on top of their already high income tax.
The weight of each good or service can now also change yearly. One year the calculation can be biased towards meat, and the next year meat could hold a tiny weighting. Let’s cut to the chase…
Now that the inflation number calculation has changed it’s predicted that inflation will drop by 2%-3% by the end of Q2 2023.
This drop isn’t in real terms. It’s in terms of “we’ll make up whatever inflation number we want and there’s nothing you can do.”
I’ve said for years that real inflation is at least double what the government reports it to be, if you do some basic calculations yourself. But most of us aren’t mathematicians and don’t know how inflation works.
So we trust the number and never verify.
Financial markets are likely to get a huge pump
Markets crashed last year.
Everyone had a sad face. Stocks down. Tech stocks down harder. Crypto fell off a cliff.
But as the inflation number artificially comes right down to the 2% target, just in time for the election, there’ll be a good argument for halting further interest rate hikes or …. wait for it … lowering interest rates again.
That’s right. The game for the foreseeable future will likely be low interest rates and more money created out of thin air through quantitative easing.
The financial markets are so broken and full of debt that the global financial system can’t handle normal interest rates or major economies running without free money given to them through money printing.
Even more strange is the inflation calculation change will lead to something worse than inflation: deflation. The Federal Reserve is likely to overcorrect (like they always do) and create the opposite problem.
That’ll lead to stupidly low interest rates, stimmy checks, and more free money for all than we’ve ever seen before.
Remember 2020? The US created 40% of all US dollars ever to exist during this period out of nowhere. Not through tax income. No. By adding extra zeroes to their bank account with zero consequences.
This is the money game we all play whether we’re aware or not.
What this all means for you
Never trust inflation numbers. They’re manipulated.
Inflation is the quiet tax you pay on top of everything else. It’s what has created the biggest wealth gap in history between rich and poor people.
Those who understand this get richer. Those who don’t get painfully poorer. The only solution is to understand how the inflation game works and buy insurance.
Owning real assets is the insurance against this money nightmare.
The returns on your money have to be higher than the real inflation number, otherwise you’re going backward financially.
Get a basic financial education. Learn to outpace inflation.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.