Fake Inflation Expectations Meet Good and Bad Inflation
This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/fake-inflation-expectations-meet-good-and-bad-inflation?post=119521&uid=4798
You have to ask yourselves if inflation expectation increases amount to fake news. Here is a recent FRED chart of inflation expectations:
We know that this inflation expectation increase has failed in the past. It failed in 2013/14 with the bond tantrum. It failed in early 2016. It failed in 2012, and in 2011, and in 2010, and in December, 2007. That was a big, big fail. This is the most failed economic indicator ever devised! But people continue to push it as if it is truth. Maybe eventually it will be true, kind of like those who predict recessions every year will get it right now and then.
Here is the longer chart showing just how this indicator is always bullish, with results that are, well, just the opposite:
You have to ask yourselves if inflation expectation increases amount to fake news. Here is a recent FRED chart of inflation expectations:
We know that this inflation expectation increase has failed in the past. It failed in 2013/14 with the bond tantrum. It failed in early 2016. It failed in 2012, and in 2011, and in 2010, and in December, 2007. That was a big, big fail. This is the most failed economic indicator ever devised! But people continue to push it as if it is truth. Maybe eventually it will be true, kind of like those who predict recessions every year will get it right now and then.
Here is the longer chart showing just how this indicator is always bullish, with results that are, well, just the opposite: