Inflation: The good, the bad and the ugly

After being shocked by recent signs of inflation, we are in the midst of inflationary control and are in the stock market. I report changes in inflation and are committed to excluding fears in excessive situations and warning in the right case. Last week the market received three noteworthy inflation signals, one good, one bad, and one an ugly signal. If you missed it, the US stock market has always been favorable, as the January Employment Status Report showed an average sharp rise in revenue per hour. The compensation inflation index showed a 9% increase over the previous year. As a result, the long-term loss of stock market volatility resumed, and the correction of 10% of Standard & Poor's 500 index (SPY) continued. But based on my observations of the US dollar, I think the market seems to be worried that the Fed is not just inflation. Since then, the market has paid close attention to all indicators of inflation and reaction.

In some cases, the rise in inflation is a good sign of economic health, but in other cases it is bad news and there is no peaceful signal for a potential economic recovery. Prospective pessimism is an ugly contrast

Why is inflation bad? Inflation is not bad if you are running at a predictable rate of 1 to 3% per year. When the inflation rate begins to fall to 5%, 10%, 50%, 100%, it may not afford to buy future products and savings and investment abruptly lose their purchasing power, so things are outrageous It will be something. Or you just can not plan your economic future. Before inflation runaway, the Fed should raise interest rates. As we face conflict by inflation, it is too late for the Fed to become effective due to the delayed effect of monetary policy. Higher interest rates slowed the demand for borrowing, which slowed production, employment growth and investment. As a result, the inflation rate will eventually decline.