WTAF!?!
Markets were quick to wave off the latest figures. The stocks really are in a euphoric mode right now, and investors will really accept any reason to continue buying the rally.
The reason given to dismiss today's numbers was that one-third of the massive price increase was due to increased demand for used cars.
If we ignore used-car data, the numbers don't look that bad. I'm not even kidding you. Here's a CNBC article to that affect.
So, the prices of food, energy, clothing, plane tickets, and hotels all rose sharply, but we're going to ignore that because a third of the figure was caused by a single sector?
Obviously enough, some people have very poor math skills. Two-thirds is greater than one-third, meaning that the component not associated with the used car market was twice as large.
Also, used car prices should probably be seen as some sort of bellwether in this case, instead of something to be ignored.
If the price of used cars is surging, it means people are starting to get back out and drive. The velocity of money, which is a key contributor to inflation, will likely be picking up even more going forward.
Stagnant money, even the massive amounts that the Federal Reserve has printed since the start of the pandemic, won't change much if it's dormant or going into the stock market.
Inflation will only pick up once the economy gets back on track, people start earning and spending, and money is changing hands.
A spike in used car prices means more people on the go, greater velocity of money at the bottom end of the trickle down economy.
Meanwhile, Fed officials are still telling everyone that "inflation is transitory," while they pour an unjustifiable $120 billion into the market each month.
