A weekend topic starting with Bloomberg. “For years, Fridays at Beef ‘O’ Brady’s, a sprawling restaurant chain in the Southeast, meant one thing: the steak-and-shrimp special. But in January, CEO Chris Elliott saw signs that consumers were feeling the squeeze of soaring inflation. So he took the $12.99 surf-and-turf dish off the specials list, replaced it with a fish-and-chips platter and slapped a $9.99 price tag on it. Even with the change, though, customer traffic has been flagging in recent weeks.”

“‘People are looking for deals; they’re getting hammered everywhere — at the gas station, at the grocery store,’ said Elliott, who acknowledges that restaurants, including his own, have also been raising prices.”

The Associated Press. “As the Federal Reserve intensifies its efforts to tame high inflation, its top officials are casting their aggressive drive in a new light: as a blow against economic inequality. Some of the most dovish Fed officials, who typically favor low rates to nurture the job market, are now going out of their way to point out ways in which inflation falls hardest on poorer Americans. Curbing high inflation, they argue, is a fairness issue.”

“The burden of high prices ‘is particularly great for households with more limited resources,’ said Lael Brainard, an influential member of the Fed’s Board of Governors and a longtime interest rate dove. ‘That is why getting inflation down is our most important task.’”

The Washington Post. “For the first time in more than a decade, the 30-year fixed mortgage rate hit 5 percent. ‘The Fed is in full-on sell mode of 10-year Treasury notes,’ Ken H. Johnson, real estate economist at Florida Atlantic University, said. ‘Last week over 20 percent of the volume in the 10-year market was Fed selling. With that amount of one-sided activity, long-term mortgage rates, which track the yields on 10-year Treasury notes, can only go up.’”

From CBC News. “There are already some short-term signs that Canada’s housing market is cooling as the Bank of Canada starts to raise its benchmark interest rate. ‘The past two years, we’ve had free money,’ said Nasma Ali, a Toronto mortgage broker. Ali says paying those higher costs is going to be ‘a tough pill to swallow’ for some prospective home buyers. ‘Now, people will think twice,’ she told CBC News.”

The Globe and Mail. “The Bank of Canada is expected to announce its first oversized interest-rate hike in more than two decades this week after hawkish comments from the country’s top central bankers and growing signs that the economy is overheating. Policy makers are growing concerned that the world is entering an era of stubbornly high inflation, not seen since the 1980s. Agustin Carstens, general manager of the Bank for International Settlements, an umbrella organization for the world’s central banks, focused on this theme in a speech last week.”

“‘New pressures are emerging, not least from labour markets, as workers look to make up for inflation-induced reductions in real income. And the structural factors that have kept inflation low in recent decades may wane as globalization retreats,’ he said. ‘If my thesis is correct, central banks will need to adjust, as some are already doing. For many years now, having conquered inflation, they have had unprecedented leeway to focus on growth and employment. … But this is now no longer possible, since low and stable inflation must remain the priority,’ he said.”

The South China Morning Post. “The past month has seen the publication of two vastly differing examinations of how China’s emergence is altering and challenging the balance of global economic and political power, China’s motivations and how we should respond. The books sit at the heart of arguments and disagreements about deglobalisation and decoupling, as well as over whether China should be regarded as an enemy.”

“As a brief 2010 case study by the Asian Development Bank on iPhone manufacturing in China showed, China found itself at the heart of a multibillion-dollar supply chain but capturing a bare 7 per cent of the nominal export value of that trade. The case showed in fine detail how immiserating it was for Chinese assembly workers to be locked in a supply chain that left all the high-value-adding parts of the supply chain firmly rooted in the US, Germany, Japan and South Korea.”

“From that point forward, Beijing began raising minimum wages, outsourcing low-value-adding assembly to other countries across Asia and edging up the value chain with the aim of capturing more value-added roles. This created the fifth ‘shock,’ which is the beginning of the end of China’s deflationary gift to the world economy – a 20-year period during which low-cost manufacturing in China kept consumer prices down and inflation at bay.”

The Asia Times. “Such a general increase in all prices – prices in China, prices in America, prices in Europe – is always and everywhere the result of an increase in buying power – that is, an increase in a quantitative measure of general money power – an increase in the quantity of money – which is in excess of the concurrent increase in the new production of goods and services.”

“Today almost everywhere in the trading world, the quantity of money has risen far beyond the needs of trade, and it may be said more or less with certainty that this current inflation will go on for some time. American Democrats and Republicans both added fuel to the blazing monetary excess that had been ongoing since the anti-monetarist policy of zero interest rates was promoted by New Keynesian Professor Ben S Bernanke.”

“Bernanke, along with other New Keynesians, greatly feared (of all things) falling prices. In addition, Bernanke seemed self-serving, as later shown by his claim in his 2015 book that only (his) Fed easy-money policies prevented in 2008 an ‘economic catastrophe greater than the Great Depression’).”

“Whatever may be the reasons for it, New Keynesianism helped central bankers everywhere to abandon monetarism, forget their obligation to stand guard against inflation and think paper money was a good idea. Like so many politicians who ignore the laws of history, Chairman Bernanke said we were in a ‘new era’ of ‘great moderation’ and somehow the old rule that central bankers should, above all things, prevent inflation, was old thinking.”

From Swiss Info. “The Swiss real estate market recorded a bumper year in 2021. The total return, comprising rental income and value changes on properties, was higher for real estate investors than it had been in seven years. Prices have been heading in just one direction – up – for years, and interest rates are low. ‘The situation in Ukraine has given us a new baseline,’ said Donato Scognamiglio, of real estate consultancy IAZIExternal. ‘Inflation – the risk we didn’t want to look in the eye before – is now here.’”

From David Stockman. “The March CPI came in at 8.5% on a Y/Y basis – the highest rate of gain since December 1981. But it was the composition of that figure which makes a mockery of Wall Street’s knee-jerk reaction to a BLS report that purportedly ‘was not as bad as expected.’ That is to say, the overall index was goosed heavily by food, energy, commodities and durables. All of these components are now soaring toward double-digit territory, yet these are the very items – as opposed to domestically produced services – that the Fed has the least influence over.”

“Food prices are nearly guaranteed to erupt well into the double digits by the end of this year and into 2023. In fact, the CPI food price index is likely to peak somewhere near the level last reached in December 1973 (20% Y/Y). Of course, that’s a whole new ball of wax for the Fed and other central banks. If food price-driven inflation is not forcefully and credibly addressed, their vaunted ‘independence’ owing to a virtually certain populist uprising is most definitely at serious political risk. The story is similar for durable goods.”

“Again, there is nothing on the horizon to suggest a radical abatement any time soon. Indeed, whatever the motivation of China’s Red Suzerains for the sweeping lockdown in Shanghai and elsewhere at the moment – a genuine fanatical pursuit of Zero-Covid or just an excuse to send a message to Washington’s warmongers – the fact is, global supply chains are being hit good and hard, yet again.”

“The Fed, of course, will say that it is not responsible for the Washington/Brussels War on global commodities central. But never mind. Soaring commodity prices will insure that overall inflation remains ‘extraordinarily’ elevated for many quarters to come. Accordingly, whether they like it or not, the money-printers will be out of business for the foreseeable future.”

“The heart of the commodities price eruption, of course, is energy. And in that case the price increases have been so huge and threaten to rise even higher that they will not work their way out of the overall inflation index for numerous quarters to come, even as their secondary effects filter through to industrial, transportation and services prices. This gets us to the insanity of Washington’s meddling in the Russia/Ukraine dispute and its unhinged Sanctions War against the former.”

“What this is doing is prolonging a destructive war that Ukraine cannot win; recklessly pursuing Washington’s purported right to determine what happens on Russia’s doorstep; and destroying the dollarized global trading and payments system upon which America’s tenuous prosperity actually rests. Yet Washington is now so invested in this wrong-headed adventure that it has essentially turned over the keys to the dangerous clowns who run the Kiev government.”

“They have been falsely turned into the very embodiment of Churchill heroes, while the endlessly corrupt, authoritarian, neo-Nazi influenced cesspool which passes for the Ukrainian government has purportedly become the front line in the battle for democracy and human rights. These clowns in Kiev essentially want the world to commit economic suicide. And that’s all because they previously insisted on joining NATO and waging a brutal war on the Russian-speaking population of the Donbas for the past eight years – a savage endeavor which resulted in 14,000 civilian deaths and which by comparison pales the current Russian-caused civilian harms.”

“As the Russians eventually take control of the Donbas and northern rim of the Black Sea, the Washington/Brussels chicken-shit sanctions war against Russia will be cranked up to absurd levels, including further disruption of the energy complex.”

“Did the Fed see all of this coming? Of course not. But in taking their balance sheet from $900 billion to $9 trillion in less than 14 years did they consider the possibility of a Black Swan in global commodity markets and supply chains?”