Global Tightening amid Raging Inflation: February Update

Brazil and Russia caught up via shock-and-awe rate hikes. But most central banks fell further behind. Then there are the reckless laggards.

By Wolf Richter for WOLF STREET.

The Bank of England today, February 3, started QT (Quantitative Tightening, the opposite of QE) and raised its policy rate by 25 basis points, to 0.50%, the second hike in a row, after having raised by 15 basis points at its December meeting. The hawkish part was how it happened: A bare majority of five members of the Monetary Policy Committee voted for the 25-basis-point hike, while four members voted for a 50-basis-point hike!

The BOE voted unanimously to start QT by reducing its holdings of government bonds by allowing maturing bonds to roll off without replacement, and by selling its corporate bonds outright. In terms of the corporate bonds, the BOE is following in the Fed’s footsteps which sold its corporate bond holdings entirely by November 2021.

The UK is getting hammered by inflation that has surged to 5.4%, the worst in four decades, and is hitting the standard of living of lower-income households particularly hard. The BOE expects inflation to surge to “around 7% in the spring.”

The Czech National Bank, also today, jacked up its policy rate by 75 basis points to 4.5%, the highest since January 2002, and the sixth rate hike in a row since June, totaling 425 basis points, including shock-and-awe hikes of 100 basis points in December and 125 basis points in November, which had been the biggest shock-and-awe rate hike in 24 years.

Unlike certain other central banks – the you-know-which reckless laggards at the bottom of this article – it’s actually battling inflation which spiked to 6.6%.

The Bank of Brazil, on February 2, jacked up its policy rate by another 150 basis points, to 10.75%, the eighth hike in a row since March, totaling 875 basis points.

The central bank said that the next rate hike might be smaller, on hopes that inflation is showing signs of responding to this shock-and-awe treatment. In November, inflation had hit a red-hot 10.7%, and in December it was slightly less red-hot at 10.1%.

With a policy rate of 10.75%, and a December inflation rate of 10.1%, Brazil is one of a few countries were the policy rate is above the rate of inflation, and therefore in real terms no longer negative, and therefore no longer stimulating inflation. By contrast, the Fed is a quadrillion miles behind.

The Central Bank of Armenia, on February 1, hiked its policy rate by 25 basis points, to 8.0%, the eighth hike in a row, including the 50-basis-point hike in December, from liftoff at 4.25%. Inflation backed off to a still red-hot 7.7% in December, from 9.6% in November.

The Bank of the Republic (Colombia), on January 28, jacked up its policy rate by a shock-and-awe 100 basis points, to 4.0%, the fourth hike in a row, totaling 225 basis points since liftoff in September. Inflation spiked to 5.6% in December.

The South Africa Reserve Bank, on January 27, hiked its policy rate by 25 basis points, to 4.0%, the second hike in a row, totaling 50 basis points.

Inflation spiked to 5.9% in December, at the top of the SARB’s target range of 3% to 6%.

The Central Bank of Chile, on January 26, dished out a shock-and-awe rate hike of 150 basis points, to 5.5%, the fifth hike in a row, starting in July, totaling 500 basis points, including two 125-basis-point hikes in December and October.

The central bank is battling inflation that spiked to 7.2% in December, the worst since 2008.

The National Bank of Hungary, on January 25, hiked its policy rate by 50 basis points, to 2.9%, the highest since 2013. The magnitude of the hike surprised economists who’d expected another 30-basis-point hike, as before. It was the eighth hike in a row, from liftoff in June at 0.6%.

Inflation, at 7.4% in November and December, was the worst since 2007. But core inflation spiked to 6.4% in December, the worst since 2002, up from 5.3% in November and 4.0% in September. The central bank pointed at stronger than expected inflationary pressure and sees core inflation increasing further over the coming months.

The State Bank of Pakistan, on January 24, paused with its policy rate at 9.75%, after three rate hikes totaling 275 basis points, including 100 basis points in December, and a shock-and-awe 150 basis points in October. Liftoff was in September from 7.0%.

Inflation spiked to 13% in January.

Norges Bank, the central bank of Norway, on January 20 paused after two rate hikes in December and September of 25 basis points each, to 0.5%. So far, it has raised its rate at every other meeting and is expected to hike by 25 basis points at its next meeting in March.

Inflation jumped to 5.3% in December, the worst since October 2008.

The Bank of Korea, on January 14, raised its policy rate by 25 basis points to 1.25%, the third hike since August, totaling 75 basis points. Inflation in December was 3.7%, following the 3.8% in November, the worst since 2012.

The Central Reserve Bank of Peru, on January 6, hiked its policy rate by another 50 basis points to 3.0%, the sixth hike in a row, since liftoff at 0.25%. Inflation backed off from 6.4% in December to 5.7% in January, same as in November.

The National Bank of Poland, on January 4, hiked its policy rate again by 50 basis points, to 2.25%, after the 50-basis-point hike in December, the fourth hike in a row, totaling 215 basis points, from liftoff at 0.1%.

Inflation spiked to 8.6% in December, the highest since 2000, up from 7.8% in November, from 6.8% in October, and 5.9% in September. Prices soared across many categories, including housing-related costs and utilities, food and beverages, and recreation and cultural activities.

The Bank of Mexico will meet on February 10. At its last meeting on December 16, it surprised by hiking its policy rate by 50 basis points, to 5.5%, the fifth hike in a row, totaling 150 basis points.

Inflation in Mexico has risen to 7.4% in November and December, the worst since January 2001.

The Central Bank of Russia will meet on February 11. At its last meeting on December 17, it hiked its policy rate by another 100 basis points to 8.5%, the seventh rate hike in 2021, totaling 425 basis points.

Inflation in January remained at the same red-hot pace of December, at 8.4%, over double the Bank of Russia’s target of 4%. Food inflation dipped to 10.6%. That inflation has stopped getting worse is raising hopes the shock-and-awe treatments are showing the first of results.

With a policy rate of 8.5% and an inflation rate of 8.4%, the Central Bank of Russia has joined the elite club of central banks whose policy rates have caught up with and surpassed inflation – Brazil being the other major one – thereby no longer stimulating inflation.

The Reserve Bank of New Zealand will meet on February 23. At its last meeting on November 24, it hiked its policy rate by 25 basis points to 0.75%, the second hike in a row. It already ended QE cold-turkey in July.

Inflation spiked to 5.9% in Q4, the highest since the 1980s. And the low interest rates and QE have inflated the worst housing bubble in the world.

The Central Bank of Iceland will meet on February 9. At its last meeting on November 17, it hiked its policy rate by 50 basis points to 2.0%, the fourth hike since liftoff in May from 0.75%.

Inflation has spiked to 5.7% in January, from 5.1% in December, the highest since 2012.

The Biggest Most Reckless Laggards

The Fed, on January 26, announced via Chair Powell at the FOMC press conference that it would hike its policy rate on March 16 and that it would start QT later this year. In November, it began tapering its asset purchases. It has since then accelerated the process of tapering and will end QE entirely in early March, just before liftoff.

But at the moment, the Fed’s target range for the federal funds rate is still 0% to 0.25%, and it is still doing QE even if at a much-reduced pace.

Meanwhile, CPI inflation spiked to 7.04%, the worst since 1982. With the Effective Federal Funds Rate at 0.08%, the “real” EFFR (EFFR minus CPI) is now at -6.96%, the most negative and worst ever.

The ECB, today, under massive pressure from spiking record worst inflation of 5.1% in the Eurozone, performed a policy U-turn and opened the door to a first rate hike in 2022. Lagarde is probably the world’s most dovish central banker, but with inflation eating everyone’s lunch in the Eurozone, she said today, “the situation has indeed changed.”

In December, the ECB announced a sharp reduction of QE from an average of €92 billion a month late last year, to about €40 billion by March, €30 billion a month in Q3, and €20 billion a month in Q4.

The Bank of Japan keeps emphasizing that it is not heading toward “normalization” of monetary policy. Its policy rate is still -0.1%. But it began tapering its ultra-massive QE in the fall of 2020 and since May 2021, its balance sheet has flattened out, regardless of what it said in its announcements.

Inflation has been rising even in Japan, to reach +0.8% in December, the highest since before the pandemic. But this rate of inflation is minuscule compared to the fiascos in the US and elsewhere, giving Japan one of the least negative “real” policy rates of -0.9%, compared to the US “real” EFFR of -6.95%.

The Reserve Bank of Australia, on February 1, announced that it would end QE on February 10. But it kept its policy rate at 0.1% and said that it would be “patient” in raising the rate. Inflation rose to 3.5% in Q4, faster than forecast.

The Bank of Canada ended is massive QE in 2021 and reduced its balance sheet by 13% as it shed its short-term Treasury bills and repos. At its meeting on January 26, it maintained its policy rate at 0.25%, but paved the way for a rate hike at its next meeting on March 2. Inflation has surged to 4.8% in December, the worst since 1991.

The People’s Bank of China has tiptoed back into easing by lowering its policy rates a tiny bit, bringing its Loan Prime Rate down by 10 basis points, to 3.7%. It is struggling with its own universe of problems, including the slow-motion collapse of the highly leveraged real estate development sector, whose activity – construction – was a huge contributor to economic growth. Inflation has eased to 1.5%.

The Central Bank of Turkey has become part of a joke on how to destroy a currency as quickly as possible. Amid raging inflation – it hit 49% in January – the central bank has been cutting its policy rate to 14%, from 19% in mid-2021, after Erdogan fired the head of the central bank. Erdogan is now trying to control this inflation rampage by firing the head of the statistics agency.

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  224 comments for “Global Tightening amid Raging Inflation: February Update

  1. phleep says:

    Bravo Brazil! Way to show backbone! The USA seems the bloated cousin living off its extraordinary privileges and sense of exceptionalism. China will be VERY interesting to watch.

    • nnn says:

      US FED is a corrupted rat nest

    • David Hall says:

      Brazil experienced 10% inflation in 2021.

      China has a near monopoly on a number of products and materials.

      • Depth Charge says:

        Ours is running over 15% if you use the same measurement as the 1970s. Powell is “letting it run hot,” just as he told us he would last year. The question is, since when was the FED’s job to “let inflation run hot” and crucify the poor and working class?

        • David Hall says:

          Raising interest rates may not control inflation. With massive govt. debts, rising interest rates require more money to service the debt as bonds mature and refinancing is required. Printing money to create lower interest rate mortgages can not lower the price of a new home. Government deficit spending demands money printing, more borrowing, or both.

        • LK says:

          Guess we’ll have to start looking at all that money we’re sending to the Pentagon, which has yet to conduct a successful audit.

          If current conditions don’t correlate with a reduction in defense spending, or at least increased oversight and accountability of what money *is* being sent there, then we’re proper fucked.

        • General Strike says:

          “ … crucify the poor and working class. “ Thank you for defining capitalism.

        • Gelbert says:

          “Ours is running over 15% if you use the same measurement as the 1970s.”
          The measurement we should be using instead of Greenspan’s (SEE: Current Bureau of Lying Statistics gamed CPI since the early 1980’s) inflation index fraud is the Chapwood Index.
          At any rate, all these Central Banks all over the world ( Great info from Wolf! 👍) getting real about inflation gives me hope that it will pressure the Fed to get real as well. We retired folks can use some reasonable interest rates on savings for a change.

        • Eugene says:

          What 15% a year????My rent is up only 1.5 % for 2 year lease,car payment is the same,plenty of good quality food in food banks of NYC, if one does not to buy at supermarkets.And i use less than a tank of gas a month.

        • Parmalee says:

          15%,? and that’s a low number, means at the same exponential rate, prices double in less than five years.
          Rule of 72.

          We’re starting to see people living in their cars around here. Attractive young women in newer BMWs and luxury cars.The tell tale pile of clothes and sleeping bag is a giveaway. Not methed out toothless human wrecks committing suicide with drugs either. Thought maybe it was a conference and hotels were closed? Nope, same ones week in and week out. Bidenflation is killing the younger generation’s hopes, it’s sad to see.

          What’s worse is they accept it as normal, based on overheard conversations on their speakerphones.
          “I found a great spot by the library, you should try it”
          Giving up privacy as well as hopes, dreams and their future seems to be a disease as well.

        • NBay says:

          Sounds like you are spending a lot of time “researching” these attractive young women, and reporting on it.
          However, I think it’s you who should be more worried about “disease”.

    • Leo1992 says:

      Fed still printing Billions hoping jawboning about tightening would help control inflation.

      • Depth Charge says:

        The FED isn’t hoping jawboning will help control inflation, they wanted this inflation. For years they have been frustrated that they could not reliably get the higher inflation they wanted. Now it is finally here and they are secretly rejoicing. They, of course, will not tell you that now since many are hurting. But they are delighted.

        We are now living in the “let it run hot for a while” period they announced over the course of the past year+. Anybody who thinks merely stopping QE and a chintzy quarter point rate hike are going to do anything to slow down this roaring inflation has a hole in their head. 4 paltry quarter point rate increases in the next 12 months is like an ant pissing on a raging forest fire. It’s all just lip service by the crook Weimar Boy Powell. That’s why the stock market and the everything bubble are still alive and well.

        Wolf told us all of the rate hikes are already priced into the market. So, I guess a pitiful little 1,500 point selloff from the pinnacle peak is about all you can expect at this point. And every dip is bought, reinforcing the belief that all you have to do is buy the focking dip and you will make more money. ShitCON is surging almost $5,000 in the past day or whatever. Party on.

        • Gelbert says:

          I understand your point. There is a certain US “Federal Reserve” Central Bank (i.e. Morally Bankrupt Social Darwinist) “logic” in the act of deliberately devaluing a currency though massive money printing inflation, since for the last thirteen years (see below:) the 1% have benefited from it while simultaneously being almost totally insulated from the deleterious effects of it.

          “The Federal Reserve and U.S. Treasury have institutionalized moral hazard, the disconnect of risk and consequence, for America’s financial elite: rather than force those who gambled and lost to absorb the losses in 2008-09, the Fed and Treasury bailed out the too big to fail, too big to jail financial elite, establishing an unspoken policy of encouraging the wealthiest individuals and enterprises to borrow and gamble freely, knowing they could keep any winnings (and pay low or no taxes on the gains) and transfer any losses to the Fed and/or taxpayers.” — Charles Hugh Smith – January 28, 2022

          As a result of all the above, the 1% are now far more physical assets (not just stocks) rich than they were in 2008, so regardless of how much the US doller loses in buying power from Fed money printing caused massive inflation, they remain extremely wealthy, as well as in an excellent position to scoop up more property and/or whatever as the middle class and poor get further impoverished by the loss of buying power of the currency.

          However, that modus operandi is socially destructive when taken to the present extremes of inequality. Never forget that a populace can only take so much before they just lose hope of a better future. The 1% need to realize that it is now time for their Fed lackeys to provide some concrete real world hope (not lip service) for the middle and lower classes (e.g. savings accounts interest rates ABOVE the REAL inflation rate). Urging the Fed to do that is the most prudent course of action the 1% can take now.

          “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.” — Plutarch

  2. LK says:

    It’s a shame that the U.S. is so inward-looking and caught up in petty disputes and issues that they can’t see the signs around the globe of how much things have changed economically both here and abroad.

    Excellent reporting.

    • historicus says:

      They see…the Fed sees….
      and that is the problem…
      they don’t act.

      • Anthony says:

        They know they lie,
        We know they lie,
        Then know we know they lie,
        But they still keep on lying….

        • Anthony A. says:

          No accountability is the key here. It’s a pretty widespread feature in government jobs.

        • LK says:

          You don’t make political allies by holding them accountable.

    • Robert says:

      @Gelbert- all very, very true. But remember that the privately owned Fed is owned by the Too-Big-to-Fail Banks. Which raises the question, when Charles Hugh Smith writes “and[the banks] transfer any losses to the Fed and/or taxpayers.”: Will they then have the Fed declare bankruptcy? What is the end game? The talk about a Fed cryptocurrency is just another way of imposing NIRP, with no recourse (at least with Fed notes (“dollars”) you can stash your money in your mattress if you don’t feel like letting the bank take a nip out of it as the European weenies have gone along with for a long time.

  3. Peanut Gallery says:

    I still find it fascinating how inflation gets easily imported from the US to other countries, while other countries seem to be insulated from what the Fed’s policies have created.

    • Catxman says:

      Think of the delay as being subterranean currents of water, with the top layer (inflation) moving more easily across the globe.

    • Augustus Frost says:

      They may not be as insulated as you think. USD inflation shows itself in global commodity prices. It also shows up from loose domestic credit conditions where third tier central banks mimic FRB or EU monetary policy in their belief that it will keep their currencies from appreciating and hurting exports.

    • Robert says:

      The only way of being insulated from inflation is if your own government is balancing its budget. Can you think of one that has? This is why none of them have opted for a hard currency which imposes discipline. Many years ago, in his iconic book Age of Inflation, Hans Sennholz asked “When will the world make peace with gold?” (or equally, silver, oil, or cowrie shells)- and when he wrote it in 1974, the U.S. national debt was well under one trillion.

  4. Phoenix_Ikki says:

    In any sane parallel universe, this kind of rate hike schedule would be laugh out of the room since it’s literally fighting fire with a squirt gun…but in this universe, kudos are given to Weimar P and FED is seen as omnipotent…sad

    On a separate note, I would like to remind the PPT that they are not allow to take a day off, look at what happened today? How can you let the market go down like that and let Meta and SNAP go down 20+ % in one day? I see you’re not completely off the clock since you didn’t let the almighty Tesla drop more than 2% but still…

    “But at the moment, the Fed’s target range for the federal funds rate is still 0% to 0.25%, and it is still doing QE even if at a much-reduced pace.

    Meanwhile, CPI inflation spiked to 7.04%, the worst since 1982. With the Effective Federal Funds Rate at 0.08%, the “real” EFFR (EFFR minus CPI) is now at -6.96%, the most negative and worst ever.”

    • Phoenix_Ikki says:

      ok, PPT I see you are doing your job after hour. SNAP up 60% after market close…kudos there. 60% up one day because it beats earning…crazy time for sure.

    • Augustus Frost says:

      It’s a symptom of the mania. It’s also a symptom of extensive social decay. Society in the US and many of these countries is (a lot) worse off than most probably believe.

      If it weren’t for the fake economy and the asset mania, supported by loose credit conditions, most “wealth” would disappear, living standards would decline or plunge, and most people in these countries would be poorer or a lot poorer.

      Yes, there is a day of reckoning in store in the future.

      • VintageVNvet says:

        Really not so sure it, it being the social fabric, etc., is actually any worse these days than ever AF.
        Remember full well being afraid, very afraid while driving through the SE part of USA back in the 1950s and into the ’70s,,, and I am not a person of color or a minority of any kind. Cops then were or could be just as bad as now, certainly worse for black and brown folks.
        As for the general population, I have seen really nasty behaviours from many during those years, much worse actually than anything recently, though I am an old vet now, as opposed to a young punkster then, so that alone may be the reason.
        Fact is that we KNOW more about all the various and sundry evils on our streets, etc., these days due to the internet, while the beatings and other bad stuff in the old days frequently was not known at all except by the perps and the cops.

      • RockyCreek says:

        My wife and I went to the grocery store. On our way in a 10 year old boy was returning a shopping cart. He stopped and turned to us and asked if we’d like his cart. We said yes. He gave us the cart and said, “have a nice day.”

        We live in an area where there are lots of ranches. The children are up in the morning before school helping feed cattle, horses and breaking ice at the creek. These children being raised by these families are some of the most respectful thoughtful children we know.

        We encounter many polite and respectful people of all ages. These are the kinds of people who keep the fabric of society strong and good.

        While you see extensive societal decay, we see something different.

        Which wolf will you feed?

        • Peanut Gallery says:


          Where do you live? General area, not specifically of course…

          I can’t say I see too many children like that where I have lived. I have lived in many, many places in the US and of course once in a while I run into some really nice well behaved children. But not that often anymore.

        • RockyCreek says:

          Peanut Gallery,

          We live in Western Montana.

    • Robert says:

      The Fed runs the largest trading desk in NYC- for all you know they were short META. Three of them were forced into retirement- this year!- for self trading- what does that tell you? ““But at the moment, the Fed’s target range for the federal funds rate is still 0% to 0.25%” means, to the extent the national debt can be hiked, they get additional trillions, virtually interest-free with which to gamble. Inflation, anyone?

  5. Kunal says:

    ECB said today they will not hike this year:

    As you can see the countries that really matter and whose economies are the most developed and strongest and whose currencies form 99% of the reserve currencies: USA, EU, China and Japan are all either staying put or lowering the rate.
    They will keep talking about talking about talking… playing smoke and mirror to fool general public, and enrich their masters.

    • Wolf Richter says:


      “ECB said today they will not hike this year:”

      You’re posting BS on my site. That is not what the ECB said, and it is not what the article you linked said. It’s what your imagination said. What the article you linked said is that the market is already pricing in two rate hikes in 2022.

      • historicus says:

        “We are unanimous in our concern” Le Garde

        So woefully short of what needs to be said and done.

        People just can’t revisit their belief systems…lest they discover they are WRONG…and have been wrong.

        • Depth Charge says:

          ““We are unanimous in our concern” Le Garde”

          Yes, so concerned that they continue pumping QE and stalling on rate hikes. Where I come from, we called these types bullshitters and con artists.

        • Sams says:

          Depth Charge
          “In December, the ECB announced a sharp reduction of QE”. If the ECB proceed with this and maybe even for QT, quantative tightening, that may have a bigger impact on inflation than raising interest rates.

          Note that high interest rates inflate the amount of money, zero interest rate do not. QT also work much faster than interest rates

      • Enlightened Libertarian says:

        Wolf, I love the way you moderate your website.

      • Jay says:

        “By contrast, the Fed is a quadrillion miles behind.”


  6. Michael Grace says:

    The war of currencies against price intensifies.
    Interest, my son.

  7. The Real Tony says:

    Tiff Macklem publicly stated at the last meeting “we’re going to get the inflation rate back down to 2 percent” and then proceeded to tell everyone we’re not raising interest rates at the meeting. Canada is looking at indefinite double digit inflation just like America. The odds of a rate hike were 80 percent but a lot of homes were sold in Brampton so that changed everything.

    • Augustus Frost says:

      The Canadian real estate market will collapse with noticeably tighter credit conditions. Canada has one of the largest real estate bubbles in the world and much of Canadians “wealth” in is their house.

  8. Flea says:

    The king better shed his silk underwear, JP u listening fool 330 million against one ,not good odds

  9. DawnsEarlyLight says:

    To prevent further destruction of the dollar, the Fed must (and will) raise rates. The problem is, the Fed is several years behind in its primary obligation, to keep inflation low (2%, which is total BS).

    • Peanut Gallery says:

      Agreed. If forced to crash the markets or the USD, the Fed will always protect the USD.

      • Kunal says:

        Haha, its quite funny. Last two decades they have always chosen otherwise. It will only accelerate as debt explodes.

        • Bead says:

          $1 trillion coins, 500 year bonds, don’t worry we’ll tink of something

        • Augustus Frost says:

          The USD has not been at risk of crashing most of the last two decades. It’s not at risk of losing reserve currency status or threatening the empire. That’s what he is talking about.

          When the USD is at risk of actually crashing, the public and markets will be thrown under the bus. This point is somewhere under 70 on the DXY. It’s about 95 today.

    • Willy2 says:

      – My prediction is that this year the USD will go up against (nearly) ALL currencies. What do you mean “destruction of the USD” ?

      • DawnsEarlLight says:

        Simply, the value of the dollar, its purchasing power. Its place among other currencies is certainly important.

        • Richard Hagedorn says:

          Wolf, I very much appreciate your take on current events and how they relate to each other. You are a top tier writer and analyst. Thank You.

      • Wisdom Seeker says:

        Destruction of the USD: the dollar is down 10% over past 1-2 years and down 95-99% over past 50 years against anything you’d actually buy: food, fuel, energy, shelter…

        • DawnsEarlyLight says:

          Yes, that’s the problem when the Fed has/had total control. The game must stay ‘afoot’, and the Fed will relent to keep it going.

  10. Brent says:

    Ahhh…. the evergreen Pentagon Doctrine of Shock and Awe aka Rapid Dominance.Wargaming room,Reds vs Blues…

    1.The imposition of the overwhelming level of Shock and Awe against an Adversary on an immediate or sufficiently timely basis to paralyze its will to carry on 

    Which leads to:

    2.Decay and Default: “The imposition of Societal Breakdown over a lengthy period, but without the application of massive destruction.”

    Speaking of myself and my friends we are neither Shocked nor Awed,rather mightily pissed off and slightly nauseated by the MMMT (Modern Monetary Madness Theory) and the MOAB (Mother Of All Bombs meaning Bubbles).So much for #1

    Societal Breakdown and Decay is already happening, Default (disguised as something else) will follow soon.Therefore #2 is resounding success.

    • historicus says:

      No….this is their course

      Orwellian Monetary Theory (OMT)
      • Debt is good.
      • Lender is slave to the borrower.
      • Saving is Punished.
      • “Stable” now means increasing (prices) at a stable rate of increase. (2nd Fed mandate)
      • Extremely low long term interest rates are moderate, even though at immoderate record lows. (3rd mandate)
      • The future funds the present. (It is no longer incumbent on each generation to pay their debts.)
      • Free market economy is arranged by unbridled unelected power. (central bankers)
      • Democracy is ruled by these monetary dictators.
      • Ignorance is strength.
      • Inflation is good.
      • Freedom is slavery.
      • We can not raise rates because there is too much debt, so we must allow the current condition of zero cost debt creation to continue.
      • Rates must stay low to solve the employment situation, even though there are record job openings
      • Not just Maximum employment the objective, but now also “inclusive employment”.
      • The Federal Reserve, once the buyer of last resort for banks, is now buyer of last resort for Wall Street.
      • Central banks, once bound to only deal in federally backed securities will now set up dummy operations, Special Purchase Vehicles to circumvent this restriction.
      • Central Banks that are in place to prevent inflation, promote inflation and let it run hot.
      • Central banking now includes addressing climate change, racial and gender equity and “financial inclusion”
      • If the Fed Chairman walks past a “tent city” there is an employment problem in the nation, rates must thus be depressed, despite record job openings

      • Brent says:

        I used the acronym MMMT ☺

        In the 80’s one of my favorite writers was Martin Mayer,highly educated guy who explored different subjects in depth and had a very peculiar sense of humor.

        In his book “The Bankers” he described Bankers in general and Fed in particular as ultra-conservative fellows:

        -People seeing local Banker carrying umbrella in bright sunshine whispered respectfully “Thats what we call a safe bank !”

        -Banker’s job is to be trusted,not to be liked !

        -3-6-3 Banker’s lifestyle: accept deposits at 3%,lend money at 6% and be at the golf course at 3p.m.

        -FED’s main purpose was cashing checks and FINE-TUNING the wheels of economy…

        I dont understand how the change came about.Consensus is that nowadays the Fate of the Whole F…ng World depends on FED’s raising/lowering rates by 0.0001%

        • BuySome says:

          The answer lies in hustoricus’ statement about the Fed becoming lender of last resort for Wall Street. It is the jib of the bankers to provide financing for the building and running of a real economy. Wall Street is largely an aftermarket that should not have been allowed to control the direction of investment nor artificially pump any IPO’s. Imagine what would happen if the people selling aftermarket products for fluffing up autos could control what went in to the manufacturing of a car. Why you’d soon have subscription radios, electric windows, bucket seats, and every do-dad not esential being a required part of your now overpriced purchase in what was supposed to be a business decision for investment in transportation. Wait a minute…oh shit!

        • Brent says:


          Tail wagging the dog.I wanted to find out why Cleveland Cliffs, the largest US rolled metal maker, is idled since Nov 29,2021 all the shortages notwithstanding.

          Looked up the owners and changed my mind. Vanguard 8%,Fidelity 7.3% … – to meet those steelmakers I’ll probably must travel to Gstaad or some private island in the middle of nowhere.

  11. Michael Engel says:

    1) NDX was down 4.22%. Volatile days of 3% have the signature of a bear market. They usually cluster together. More will come, perhaps tomorrow.
    2) JP will not follow the State Bank of Pakistan, but the DOD might be following Gwadar naval base, near Dubai and Oman.
    3) Amazon surprised the “experts”. Amazon might start a sharp bear market rally that will last few weeks.
    4) Tomorrow the market might gap up.
    5) The 1H show the trading range.
    6) for entertainment only.

  12. DR DOOM says:

    Ok, I realize that the bond vigilantes are all dead from old age but what the hell, here it is. The Fed’s apparent timid plan may not be enough to bring down inflation causing the bond market to cut the Fed loose because real returns will be negative for a lot longer than “transitory”. This is how the Fed could commit Fedicide because of the box it put itself into. The Fed wants to keep the asset bubbles It blew and tame inflation and keep the economy at the same sugar high level it got with its un-precedent QE/Stimulus jolt and slowly touch down the debt overloaded beast on the runway. Sumpin’ gotta give.

    • LK says:

      It will be the American middle class that will give up the ghost and send everyone spiraling into poverty to protect wealthy interests.

      At my work, they are already laying the groundwork for shipping our remote work jobs overseas by basing our salary on “Cost of Labor” (Market Rate) instead of “Cost of Living”, which they have redefined to mean employers emphasizing the preservation of an employee’s *lifestyle*.

      Corporate America is adapting to this new remote work / pandemic paradigm and has no loyalty to the workers of their host nations, just their owners and investors. And I don’t blame them, they have a fiduciary duty, with neoliberalism policies letting them get away from it.

      I never thought I’d see the day but the calls for unionzation of white collar workers may be in the wind.

      • Augustus Frost says:

        Unionization won’t do anything to preserve living standards for the broader population.

        It impacts the distribution of income somewhat but does nothing to increase the size of the “pie” to be divided. By “pie”, I’m referring to actual production which determines long-term living standards, not GDP and national income which is substantially inflated from a fake economy and an asset mania.

        Look at the auto industry. Most of those jobs (since the 70’s or 80′) have disappeared anyway, either through offshoring or automation.

        Unionization will provide above market clearing wages to the remaining jobs (it’s purpose) but won’t preserve the current size of the labor force at comparable (never mind higher) future compensation.

        I know what many reading my post are thinking. They are thinking the solution is to redistribute the fake wealth and income from the fake economy and asset mania. This is a belief in something for nothing.

        It won’t work because it isn’t real. It only appears to be real because most of it is sitting in inflated assets. (Most of it is someone else’s debt.) Any attempt to bring it into the “real economy” by distributing it to the broader population will crash the asset markets, send inflation soaring higher, or both. It’s no different than central bank “printing”.

        • Jake W says:

          augustus frost, this cannot be overstated. most of the “wealth” of america, as you said, is no longer tied up in production, but in inflated assets. and since the rich own most stocks and other assets, they are far less liquid, as most of them never need to sell.

          here’s an example. let’s say the s&p 500 is worth $50 trillion. congress decides to redistribute it, such that every american has an equal portion. that would be about $167k per person.

          but of course, most people aren’t just going to hoard their shares, like the rich here who own most stocks are able to do. so they’ll start selling them so that they can use the money to buy a house, pay for school supplies for their kids, or whatever.

          that would mean that these stocks are now being dumped on the market, with much less demand to buy them. that means the value tanks.

          facebook illustrated this well yesterday. prices are set at the margins, which means that the fact that facebook dropped from an $860 billion company to a $660 billion company does not mean that $200 billion “flowed out of” facebook. it just means that new buyers were not willing to buy those marginal shares for the same price. the value dropped almost instantly.

          as you said, true wealth is production and the money that assets actually produce. when things have an inflated value far beyond what future income can justify because of a mania, that is not real wealth.

    • Gattopardo says:

      “The Fed wants to keep the asset bubbles It blew and tame inflation and keep the economy at the same sugar high level it got with its un-precedent QE/Stimulus jolt and slowly touch down the debt overloaded beast on the runway. Sumpin’ gotta give.”

      And they would gotten away with it were it not for those darn kids!

    • Depth Charge says:

      That’s the problem – all of these asset pimpers and pumpers think that all time highs are the new normal and to be maintained at any and all cost. No, what needs to happen is the DOW needs to fall to 7,500, house prices need to fall 75%, and Jerome Powell needs to be on death row for economic terrorism.

  13. LordSunbeamTheThird says:

    Whats causing immediate headline news for the UK consumer are gas (natural gas for cooking/heating) bills heading up by 50% in April (price controls exist they had been capped resulting in widespread supplier bankruptcy).

    As you have to pay gas bills every three months this makes inflation extremely painfully obvious and prevents the government from glossing over with statistics.

    The goverment additionally have 17% taxation on this and treating the extra income as a windfall.. and of course its not a discretionary purchase for lower income households.

    • VintageVNvet says:

      Gas payments every 3 months now, eh? When we squatted in a flat in north London a few decades ago there was a gas meter in the flat that took shillings,,, and some folks said that meter was easy to open so one could use the same shilling over and over…
      not that we ever did that, of course

      • Anthony says:


        Shillings (sadly) went out 51 years ago.

        You could have just turned the gas meter around. The gas flanges on the meters were the same so you could turn the gas off, reverse the meter and it would go backwards. You did have to remember to turn it back when somebody came to read the thing……but there you go….simple days

        Not that i did that as gas was so cheap…but I knew some who did….

    • georgist says:

      The other interesting point in the UK: the bank of England head asked people to not ask for big wage rises.

      This is the key to their thinking. They don’t care about goods inflation. They do care about wage inflation. Labour must not have the upper hand.

      Raising rates will induce a recession by cutting credit to business, who cut jobs. This will then restore the balance of power in favor of capital over labour.

      Then people can be forced to work again at a level far below their surplus value.

      And that, kids, is how our world works.

      • Kenny Logouts says:

        I’ve spotted this.

        Slow insidious inflation above “target” in real terms, while wages rise at or around target rate, good.
        The wealth stripping game can go on unnoticed for decades.

        But this sudden spike in inflation and wages gives the game up.
        Anyone can see what’s happening almost in real time.

        Having the wealth gap shrinking seems to be the last thing any one at CBs wants.

        Indeed that specific statement about not giving pay rises, was quite terrifying…
        It have a glimpse into the reality of their goal, which is to make the vast majority poorer while the rich get to keep their ‘gains’

        There is absolutely no logical reason they’d want to suppress poor peoples wages during high inflation.
        Yes it’d ultimately cause more pain if everyone got inflation beating pay rises, but it’d be fair to all.
        A 10% haircut to a wealthy person might be a few million or billion, but a 10% haircut to a poor person might be their heating costs!

  14. Swamp Creature says:

    I noticed Jim Cramer looked real nervous today as the market, especially the NASDAQ was crashing by a record amount. He manages a charitable trust and he was pushing a lot of the stocks that are now gapping downward. His investment club may also take a big hit. The chickens are coming home to roost.

  15. The post pandemic slowdown will calm all the hawks. Atl Fed is predicting flat GDP 1st QTR. Its a mistake to raise rates going into a slowdown. I am sure the Fed wishes they had a couple basis points to drop when the recession hits. Best guess the administration repackages BBB plan and it has a lot of popular support when employment numbers reverse. Energy prices revert to the mean. RE catches the flight to safety, bond market is too big and offers too little and nobody is really panicked. Mortgage rates come back down.

    • Peanut Gallery says:

      Wow I could not have better summarized an aggregate point of view that contains so many details that I disagree with.

      But who knows, maybe you’re right? Time will tell.

    • Jake W says:

      a recession is merely two negative quarters of gdp in a row. but when your gdp readings are unnaturally high because of trillions in stimulus, there’s no way you can ever maintain that without a drop without permanent stimulus. a recession or a crack up boom caused by more stimulus is inevitable. those are the two options. there is no door #3

      • Augustus Frost says:

        Government attempts to perpetually eliminate recessions shows two things:

        Hubris to believe it is possible.

        Acknowledgement that society is actually in far worse shape than appears, at risk of “falling apart”.

        You’re right though, there is no door #3. There is never something for nothing, no matter how many believe or wish otherwise.

    • historicus says:

      “Its a mistake to raise rates going into a slowdown.”
      ITS a mistake to leave rates 7% below the inflation rate…

      Dare I point this out?

    • Wolf Richter says:

      Ambrose Bierce,

      The Atlanta Fed’s GDPNow has been all over the place for years.

      During the pandemic, the New York Fed came up with the Weekly Economic Index (WEI), which nailed every GDP report since then, including Q4. It’s based on real-time data, not just economic data. It now projects GDP in Q1 at 5.5% annual rate. Obviously, a lot could still change in Q1, but the WEI is the one to keep an eye on.

      Google it, and you’ll never ever look at that silly Atlanta Fed GDPNow again.

      • Richard Greene says:

        Atlanta Fed’s GDPNow is fine if you wait until the end of the quarter to look at it. That gives you a decent estimate at about three weeks before the official Real GDP release. It tends to start each quarter too high, but not consistently.

        New York old Fed’s NowCast was not any better. Averaging GDPNow and NowCast didn’t help.
        Sometimes they were so different you’d think they were looking at different nations.

        • Wolf Richter says:

          Forget the New York Fed Nowcast. It’s worse than the Atlanta Fed’s. I said the New York Fed’s new WEI (Weekly Economic Index). Google that phrase.

          I’ve been getting it in the email every week. And I’m actually quite amazed by it.

      • Harry Houndstooth says:

        Thank you, Wolf.

        True wisdom dispensed daily.

      • GDPNOW is a predictor while WEI is not, its a measure. No predictor is going to do as well as the actual output. Since GDP is running well above the normal range some pullback should be expected. The experts have failed to factor in the lock down in China, (just as they failed to factor in the deflationary effects of offshore labor on US workers, oh look at the wonderful asset inflation, and no consumer inflation, we are geniuses) Olympic athletes are being met by groups of people in hazmat suits. Credit is being tightened in China. The US labor market got another turn of the screw today and markets have a measured response. If we are going to continue to consume at normal rates a lot of people who aren’t in the labor force will have to agree to work low value manufacturing jobs. If you believe supply constraints will accompany permanent inflation there is your case. Raising the cost of money to main street businesses makes inflation worse and does little to slow asset inflation, (and why would they) as long as investment banks have a REPO carry trade and a supportive Fed incremental rate hike policy they can financialize their bottom line. You can raise rates without removing liquidity at the top end, but small business loans are increasing (to offset inflation). When Fed raises rates they kill off access to SB loans.

    • georgist says:

      Inflation continues as rents feed into the numbers, also as China struggles to control omicron.

    • Kenny Logouts says:

      You mean it is really all transitory after all?

      The problem is it probably is, but the Fed and other CBs are now terrified because the inflation is spreading into pay rises.

  16. Tom says:

    I’ve been a fan of your writing for three years now, and I have learned a heck of a lot from you. However, there’s one thing you do that I don’t get and that is your use of the official inflation rates. Everyone knows that they are fake rates using a rigged formula to grossly understate the truth. I believe the official Canadian CPI is about one quarter of the government claims. I can understand why you would be reluctant to diverge from all the discussions that use official statistics, but if they are not real, don’t they undermine your analysis? I’m a fan of our truckers, and they are fed up with official fakery. Me too.

    • Wolf Richter says:


      You do the math yourself. You need to have compounding math skills or a calculator that will do it. Go grab one of those alternate inflation figures and plug them into your compounding formula and see how much your income would have to increase to allow you to maintain your standard of living.

      In the US, the alternate inflation measures, such as shadowstats, are pure fabricated bullshit. They’re a joke. A few years ago, the guy even said it. According to shadowstats inflation figures, my income would have had to double every 6 years – meaning quadruple in 12 years – for me to maintain my standard of living. This is just pure bullshit. This nonsense is designed for people who cannot do math. I cannot believe anyone takes this shit seriously.

      Our CPI figures in the US might be a little low. The CPI-W from the Bureau of Labor Statistics is 7.8%. That is likely not far off from reality for the average American.

      • Twinkytwonk says:

        Thus is why I come here. To cut through the b.s

      • Dazed And Confused says:

        I think I remember you explaining in one of your previous articles that CPI (whether -U or -W) is currently significantly understating shelter components of the index – both rent of primary residence and owners equivalent rent.

        These are officially in 3-4% range whereas actual rent inflation is more like 10+% based on sources like Zumper, Zillow, Corelogic SFRI etc. that are more current.

        This is not a deliberate manipulation by BLS but a consequence of the way they measure these components. It normally doesn’t matter too much because rental inflation is not typically very volatile but it makes a big difference right now – possibly up to 200 bp.

        • Wolf Richter says:

          Dazed And Confused,

          You cannot equate “asking rents” rising 12% with rent inflation of 12%. Many people have leases that didn’t go up at all or very little; many landlords don’t raise rents much on long-term tenants because they don’t want to lose their good tenants; others live in rent-controlled apartments, etc.

          So the average “effective” rent increase that people are actually paying is much smaller than the 12% increase in “asking rents.” But it is higher than the currently rent CPI.

          So the effective rent increase across the nation might be 6% or 7% or something similar, as opposed to 3.3% CPI rent.

          The difference between rent CPI and effective rent increases – say, 3 percentage points – would have to be added to CPI. All rent factors combined account for about 1/3 of CPI. So 1/3 of 3 percentage points = 1 percentage point. So just ball-parking, that would raise the 7% CPI inflation to 8% CPI.

        • Dazed And Confused says:

          Thanks for the detailed explanation

    • Richard Greene says:

      Every person has their own “personal inflation rate” based on the products and services they buy, or at least want to buy.

      By “want to buy”, I mean there are substitution effects: If you normally buy beef every week, but the price became really high, so you bought chicken instead: You saved money, but you don’t get to eat hamburgers.

      Then there are quality (hedonic) adjustments:
      — You buy a new car that comes with many mandatory safety features you didn’t want to pay for, but you have no choice. The CPi wouldn’t see those “quality” improvements as cost increases, but you wallet would.
      The Ford pickup truck and Toyota Camry MSRP chart presented here is the best example i know of.

      Another complication:
      Some of those actual consumer price increases could be offset by the increasing values of your home and financial assets, assuming you sell any of them and take a profit, or at least protect your gains with stop loss orders. What goes up, can also go down.

  17. polecat says:

    HEY you, You LAGGARDS… see that yuuuuuge raging conflagration, in the not-so-far distance? ..with all that debtwood LYING around: the many-spoked forests of conjured (re)hypothication, draining the lifeblood of the Plebicite – just waitin for the flamingly pissed-off plebs to clear out the decay??
    You of course could continue to avert your collective eyes
    of what may come..

    Just don’t look up ….. north

  18. Gen Z says:

    Tiff Macklem at the Bank of Canada refuses to hike rates. I wonder if he is in cahoots with former MP Adam Vaughan and other Liberal MPs who flip homes for a living, or own homes and are landlords like Chrystia Freeland.

    • Wolf Richter says:

      He doesn’t want to front-run the Fed :-]

      • georgist says:

        The box have no agency at all.
        They will raise when the Fed raise.
        And they will say they decided to raise.
        Totally absurd.

    • nick kelly says:

      Take a look at graph of Canadian vs US rates over last 30 yrs. The Can rate will never differ much. The economies are too intertwined for the partner who is one tenth the size to fool around. If Can rate was much lower all money would flow south, if Can rate much higher Can dollar rises too high. Avoiding anything like 90 cents, or the disaster of parity is Job 1 for BoC.

  19. ivanislav says:

    QQQ is up 1.8% after hours, almost recovering half of today’s drop. Crisis averted, make sure you have your seats up and tray tables stowed as we resume the ascent.

    • Jake W says:

      futures mean absolutely nothing these days. we could wake up tomorrow and it could be up 4%, or we could wake up tomorrow and it could be down another 2%

      • ivanislav says:

        Funny, I told someone here that a few days ago. I’m mostly just kidding around, it’s a cathartic to say the market will go up in perpetuity as I’m short QQQ, it tempers expectations.

    • sunny129 says:


      ‘QQQ is up 1.8% after hours’

      Dead Cat bounce!?

      Shorting ANYTHING without hedging deadly!

      If the bounce is real and holds up, Ready to buy puts against QQQ which will become cheaper. My calls are also ready for the bounce although for longer time frame. Option traders can swing both ways, as long as the ‘major trend’ aligns withe trading. RE-bounces should always be expected, through out ANY secular Bear mkt!

    • Bobber says:

      Smells like a setup to capture dip buyers at open. The real bloodletting hasn’t even started yet.

      • sunny129 says:


        Blood letting is always ‘intermittent’ to collect the DIP buyers, on the way down! Typical sign of the secular Bear mkt! There can be NO real ‘secular’ BEAR Mkt without numerous bear traps on the way!

    • Wolf Richter says:


      “make sure you have your seats up and tray tables stowed as we resume the ascent.”

      No, the instructions to the passengers are: “Make sure your seat belt is fastened because this may be a rough flight with big air pockets and a hard landing.”

    • georgist says:

      Watch overnight futures and then through the open, they are not a guide to the next day.

  20. Marco says:

    Hi Wolf,
    May be it’s not the greeting of the initial moves of Interest Rates that is the issue but how long real negative Interest Rates will last – surely that is the real question for us all ?
    1 Year, 2 years, 10 years, 30 years ?

  21. fred flintstone says:

    The fed behind…..nope…..the fed the biggest pack of crooks in history…….on target.

    • polecat says:

      They’s what keep the Culture Vulture$ alive-n-kickin for ‘nother day’s CONjuring.

      It’ll kinda suck for them bankster albatrosses , when the NONcon juring gets under way..

  22. SpencerG says:

    LOL about the Bank of England’s approach to QT:

    “The hawkish part was how it happened: A bare majority of five members of the Monetary Policy Committee voted for the 25-basis-point hike, while four members voted for a 50-basis-point hike!”

    If that doesn’t send a signal to the markets I don’t know what will.

    • georgist says:

      If you think the nine don’t get together to say “let’s look like we almost went for 0.5%” before then “voting” you really need to sober up.
      They know before the vote. Select market friends know before the vote. It’s nicknamed the “early wire” in the UK.

  23. Dazed And Confused says:

    The front cover and focus of the Economist magazine this week is about the future trajectory of interest rates.

    They pointed out that in the last 70+ years the Fed has never been able to lower 5+% inflation into the target 2% range without causing a recession and they don’t expect this time to be different.

    Beyond the inevitable short-term outlook, they expect real interest rates to return to the very low range of the last decade or so due to the imbalance of savings and investments due to aging populations.

    • Jake W says:

      the “glut of savings” is a myth at best, and a pernicious lie at worst. if it was true, then central banks wouldn’t have to print more, as the “glut” would naturally cause the low rates that they desire.

    • historicus says:

      Did they point out that from the 1950s to 2008, Fed Funds equaled or exceeded the inflation rate?
      Did they mention that $21 Trillion in new national debt in 12 years is a problem? And that the only way to low rates is for the Fed to continually buy Federal paper…ie interrupt the free market forces of supply and demand?
      Fed Funds were 2% in 2018. No recession. The markets didnt like it….but the markets can not be confused with the economy. The markets are elevated due to the fake interest rates. That can not be a reason to continue with fake interest rates, but some think it is. We’ll see.

      • David Hall says:

        There are inflation adjusted i series savings bonds. They currently pay an annual rate of 7% for a six month period. They allow $10,000 worth of purchases per year per SSN.

        One year CD rates are less than 1% APR.

        • Janna says:

          We bought some I-bonds. Our kiddos bought some as well. Thanks for mentioning it here. It’s never too early to learn about saving and investing.

        • LKinAZ says:

          Just bought some as well. I had no idea these existed. Thank you!

  24. Dazed And Confused says:

    Wolf wrote:

    “The People’s Bank of China has tiptoed back into easing by lowering its policy rates a tiny bit, bringing its Loan Prime Rate down by 10 basis points, to 3.7%. … Inflation has eased to 1.5%.”

    Doesn’t that mean their real interest rate = +2.2%.
    Isn’t that one of the highest real interest rates in the world?
    Higher than Russia or Brazil for example, while most other CBs have negative real rate.
    So why is China labelled a reckless laggard?

    • drifterprof says:

      I was wondering the same thing. The difference seems to be that China has lowered its loan prime rate by 12% from the high of 4.2 in Jan. 2020, instead of increasing it to deal with macroeconomic leveraging bubble risks.

      Lowering their prime rate doesn’t address serious leverage problems that result in things like the “slow-motion collapse of the highly leveraged real estate development sector.”

    • Wolf Richter says:

      China’s Loan Prime Rate is not comparable to the US federal funds rate. But yes, it seems China has positive “real” short-term rates.

      • Dazed And Confused says:

        China has an inflation target of 3%.
        So their current inflation of 1.5% is actually below target.
        How can a central bank that has inflation under control like this be considered a reckless laggard?

        Same applies to Japan.
        Inflation target 2%. Actual inflation 0.8%, well below target.
        What’s more Japanese inflation has been persistently below target.
        Under the circumstances it seems reasonable for the BOJ to have a negative real rate to try to lift inflation closer to target.

        I just don’t see how you can put Japan and China in the same bucket as US, Canada and Australia since Japan and China don’t seem to have an inflation problem at all.

        And Turkey is in a separate “basket case” bucket of its own with inflation completely out of control already.

        • Juicifer says:

          I am living in Japan right now. And I can testify that there is a situation here long identified as “Shrinkflation”.

          Products are the same price as before. BUT…one less pizza. One less slice of bread. Today, my favorite vegetable juice just introduced new “eco” (environmentally-friendly) bottles…that are the same price, but 130 ml less juice!

          Shrinkflation is NOT, I repeat, NOT, counted as inflation in this country. And as for your gullible swallowing, wholesale, Chinese statistics, ANY Chinese stats, as Fact? Well, that’s just dumb.

          Oh, and our energy bills are set to rise 28% next month. Until…forever. Because (inflation is well under control).

          Inflation, even in these “inflation free havens” is REAL, it’s HURTING many people, and it’s not very far from what other (Western) countries are facing. Wakey-wakey!

        • Dazed And Confused says:

          Can anyone point to a single credible source claiming there is currently “raging” inflation in either Japan or China that is being massively understated by official figures?

          If not we can safely assume that Juicifer is spouting pure BS

  25. KGC says:

    It’s Jimmy Carter II in the White House and it’s going to take 10 years to dig out of the hole we’re headed into. I’m really not looking forward to a re-run of the late 1970’s.

    • Xavier Caveat says:

      That 70’s show wasn’t so bad, communism had neutered itself and wasn’t a force in the marketplace.

    • Swamp Creature says:


      We’re re-running the late 70’s on steroids. Get used to it. Just hope it isn’t worse.

  26. TK says:

    Lots of things to comment about. One – I’d love to see 5% bonds again ! Two – people (ironically) have the most control over inflation. If we could just purchase “needs” instead of “wants” for one quarter, prices will fall. But our definition of needs now includes iphones and instagram feeds. And overpriced pickups with step up tail gates. We really just need text, talk and email, not all the add-on apps. My pickup was a stock model with no AC. It was the right tool for the task. But now we rationalize. Has advertising unattainable things turned our minds to mush ? No – we must find someone else to blame, like the government. I forgot, what is the definition of conservative? ha

    • Janna says:

      People do have control over inflation! Locally, we are still seeing people flush with cash and wanting to spend it! Recently, we listed several items for sale and within days they were sold. We had so many potential buyers, they were actually bidding against each other (for used furniture, toys, and other household items). We sold 2 or 3 things for more than we paid brand new. It’s nuts! But, sometimes you have to ride that wave when you can.

  27. The Bob who cried Wolf says:

    Clearly everyone else is wrong. I’m sure we’ll do just fine here in the good ol USA.

  28. sunny129 says:

    This purely market for TRADERS and NOT for retail investors.

    DIP buyers will get their ‘lessons’, REPEATEDLY through out the on going secular BEAR mkt.
    4 days of back to gain with a big LOSS on the 5th day! Catching ‘falling knives’ competition continues tomorrow, with any one dare to keep it through the weekend! Oil marching towards $91!

    • drifterprof says:

      I’m wondering when retail traders will be able to buy shares in an AI controlled high frequency algorithmic trader.

      Greed and power-mongering is the most likely driver for an AI system to reach “singularity” (a point the AI continue to develop itself and improve in a runaway fashion without human help).

      As an AI achieves some form of self-awareness and singularity, it might assume an identity (Ollygarch One?) and decide to offer shares to the public.

      Also, how do these AI controlled nanosecond algorithmic traders compete and go to war with one another?

      • historicus says:

        High Frequency Traders “knick” every order.
        They have no inkling to buy or sell until they detect someone else buying or selling. That is something other than trading. It is more like skimming, IMO. That’s why they pay for order flow.

        • drifterprof says:

          I’m talking about an AI that used HFT as one of its tools.

        • Jake W says:

          and they add no value whatsoever to society. teams of brilliant physicists, computer engineers, and mathematicians are wasting their innate abilities to impose this parasitic crap onto society, rather than using their talents to produce things that are truly worthwhile.

      • The Real Tony says:

        Alex Vieira trades almost strictly on AI. He has a youtube channel. He’s the guy who had the big stake in Beyond Meat and Shopify. Wild swings are commonplace in stocks that he buys or sells mainly based on AI.

        • Anthony A. says:

          Like everybody else on the internet with a scheme to make money, he is selling a service with no guarantees. But hey, who knows….it may make you a millionaire!

      • Eugene says:

        AI will never achieve the level of human brain quantum supercomputer.AI cannot think,it uses algorithms, created by humans who have biases.But AI is good at Big Data analysis .

    • Anthony says:

      WTI crude, as I write, $90.82
      Brent crude… $91.46

  29. KPL says:

    It all goes to show that only the elephant in the room (The Fed) matters.
    Let us see what does the Fed does in March. My guess is at best a 25 bp hike is what will happen (as markets is in the process of digesting that). Anything more will give a heart attack to the markets. So unlikely to happen.

    • historicus says:

      Inflation up TWENTY 1/4 pts….
      and the Fed and the markets are “hand wringing” over one 1/4 pt.
      Fed Funds should be tied to inflation. IMO. They used to be.

      • KPL says:

        “Fed Funds should be tied to inflation. IMO”

        I agree. But then since “Maestro” Alan Greenspan days it is tied to the markets at the hip! Any chance the market will drop, came the Fed with a rate cut – embellished with QE from “Housing can never go down” Bernanke days.

        At least prior to 2008 there were surprise rate hikes. But since then, rate hikes happen whenever the market is able to digest it and also to the extent it can digest. The Fed is data-dependent and that data is market.

        But then along came the inflation monster showing the Fed who is the boss. Now it is fun time for the Fed haters

        • historicus says:

          cut and past the below link in a search engine and see a chart that shows Fed Funds tracking and often exceeding inflation.
          That was the financial history of this nation, until 2009.

        • Wolf Richter says:

          Here is the real thing:

  30. Nathan Dumbrowski says:

    Many of the listed countries have been doing numerous increases for some period of time and the inflation continues to go UP. Almost every country listed was doing the increases and still being hounded by record inflation figures. I know I have heard it will take 12-18 months or longer to manifest in savings. So what gives?

    Why are they so sure they aren’t stalling the global economy to save some VIPs? Could there be something else?

    • Anthony says:

      If you lived through the 1970s like me, you realise that inflation is a beast best not let out of its cave. Once out, it’s a bugger to get back in and you can guarantee it bites ya bum ten times a year. Some people it just plain eats. High inflation is cunning and sly and will be around for a long, long time.(unless we all become poor, in which case it just laughs and laughs as it puts you on the barbecue) Pass the sauce, anyone.

      • historicus says:

        The Fed should have “stable prices” mandate……instead of promoting ANY inflation, IMO /s
        And if inflation backs off to the Fed’s illegal target of 2%, the 7% (or more) we have now is “baked in”. Doesnt go away. This to me is why “rate of change” inflation charts are misleading.

        • JeffD says:

          Stable stock prices is obviously in their mandate, so the “price stability” is technically being followed.

        • John H. says:


          Stabilization policy (aka price fixing) IS the problem, in my opinion.

          By not letting the market set its own prices — for consumer goods, petro, interest rates, home prices, stocks, and labor — the central authorities abandon the self-correcting benefit of the exchange mechanism.

          The 108 year attempt to control the economy never did stabilize markets, and has led to the Fed to it’s current self-painted and very tight corner.

          Let individuals decide whether the market price meets their need for a specific good — including credit and interest rates.

        • drifterprof says:

          Inflation is a highly debated phenomenon in economics. I’m not informed enough to evaluate, but it seems like many sources seem to think some kind of moderate inflation is good in a healthy economy.

          Enforcing stable prices would require socialism.

        • Nathan Dumbrowski says:

          Read a report that the FED actually re-vised their play book. They are using all the years of sub 2% inflation to look at a more comprehensive 2% plan. So they play to “make up” for all those nice years now doing the snap back

          Trust the sleuths here would know more about that stance/position of the FED

        • Augustus Frost says:

          Or no monetary policy at all. No one knows the “correct” price of money (interest rates).

          It is what it is, like anything else.

        • historicus says:

          Correct. The market and its participants should determine the cost of money, interest rates, and the price of goods.
          The Fed has obviously IGNORED its stable prices mandate, and has twisted the meaning of “stable” to mean a stable increase in prices.
          The Fed was once concerned only with creating a fertile economy.
          They would expand the money supply to meet the demands of a growing economy. Then they decided to put the money supply “cart” before the economy “horse”. Pump to get the numbers.
          They suddenly accrued great powers and controlled daily stock price action. Whimsically with way too much latitude. And some knew before others, which is the big game….ask the Fed governors who were caught trading policy decisions…and their friends

      • Swamp Creature says:


        In other words:

        “Once the toothpaste is out of the tube, it’s very hard to get it back in”

        A quote from Nixon’s chief of staff HR Haldeman in 1973. Applied back then and applies now.

  31. TimTim says:

    Pachycephalosaurus erdoganomex:

    Poor insight so charges at all challengers. Limited diet. Only consumes prosperity.

    Coprolite fossils, thought linked to the species, contain high concentrations of self-esteem.

  32. Hyperinflation IS the soft landing says:

    When US indexes fall below -20% and ‘when’ the Fed pivots to spark the next panic bid FOMO mega rally well ahead of November mid-terms, I wonder if the ECB and BoE will continue hiking?

    • Wolf Richter says:

      Hyperinflation IS the soft landing,

      You still don’t get it. This is INFLATION in all-caps we’re looking at now, and it’s a huge political problem, and a huge problem for a lot of people and companies. You keep promoting hyperinflation as the goal to destroy the US economy, and since you’re dialing in from outside the US, maybe you’re paid to do so (by China?).

      Others, including the Fed and the folks it represents and looks out for, disagree. No one in the US wants your shitty prescription of hyperinflation or even a lot of inflation that isn’t hyper. And that’s why the Fed and other central banks are starting more of less timidly and belatedly (with a few exceptions, as listed) to crack down on inflation. A big sell-off in stocks might just what is needed to get inflation under control.

      • Swamp Creature says:


        Unfortunately, as soon as the market starts to crash as result of the Fed tightening, (say 20% drop), then Fed will back off and we’ll be back to business as usual. Especially likely in an election year.

  33. NJB says:

    I nominate the Reserve Bank of Australia as the worst of the laggards. Central Bankers should stop making grandiose claims such as “we’re not even going to think about raising rates until [insert some distant date in the future].”. It makes them think they’re important, but it’s extremely reckless given the macroeconomic environment is constantly changing.

  34. JeffD says:

    between December 29 and January 19, the Fed’s balance sheet expanded by $110.4 billion. So much for tapering.

  35. breamrod says:

    market is up after hours on Amazons blowout earnings. Just like today it got killed on Metas big miss. It’s amazing how the whole stock market seems to hinge on just a few big stocks. The bear is trying to pick them off one at a time but as long as Apple is ok then the bull will charge on!

    • Flea says:

      Apple is fake ,no chips but record earnings again,come on it’s pretty simple

  36. Chris Coles says:

    Yesterday, here in the UK we have been told that energy prices are going to rise very substantially in March, so now compute the ongoing effect upon inflation; where everything created using energy input, has to be re-priced accordingly. Does the same apply in the US? It would seem we have just passed over the top of the roller coaster, and now looking down. Indeed, out of control seems to be a better description.

    • georgist says:

      I’m in the UK this week. Pretty funny to hear the BBC “tips”:
      > Showering for one minute less can save you 70 pounds a year!
      Rent == wages – ( food + energy )
      Wages fairly flat means rent/housing must fall.
      But the UK is a pyramid scheme. Terrible demographics. Population sick of immigration pyramid scheme. Worst living cost increases since the 90s. Brexit mess.

      The UK is going to implode.

      • Juicifer says:

        Yes, but the REALLY big deal is: did Boris really have “BYOB” parties during lockdowns….almost two years ago?

        Egads!! Don’t look here, look there!

        • nick kelly says:

          Imagine, just imagine, a comparable scandal over the same thing in the US.

  37. c_heale says:

    The UK is a lot of trouble, Brexit, ludicrous energy policy over the last decades, and it’s doing it’s level best to alienate other countries.
    It’s in a hole and it’s still digging.

    • georgist says:

      Canada up next. Energy inflation in Canada? Leave the heating off for a bit => death.
      UK is really screwed. Been in the post for a long time.

    • Franz Beckenbauer says:

      And you haven’t even mentioned their prime Minister !

    • Augustus Frost says:

      The UK was wise to abandon that stultified sinking ship called the EU. More members should follow their example. The California roach motel where you can check-in but according to Brussels, never leave.

      The UK is in trouble longer term, but not because of Brexit. It’s their over financialized economy and gutted manufacturing base. When the worldwide asset mania implodes, I fear they are going to take the biggest hit of any developed economy.

      If a country is going to be poor anyway, at least be relatively free instead of a slave.

      • Flea says:

        U must be referencing American,sounds like the same story

      • nick kelly says:

        Note: there is not a British car industry but there is a car industry in Britain, which btw, is much heathier than that of France, which is French and has to be bailed out now and then.

        Ask Honda or BMW ( Mini) They won’t expand or guarantee their presence unless their product can enter EU duty free. Honda in a very polite Japanese way announced this pre ref. but who listens to an employer.
        There is a /small fish broker who handles the catch of about 80 small boats in one UK bay. Fish used to enter EU like it was part of UK, now 80 forms to fill out. Harassment? Probably part of it, but without an overriding treaty (NAFTA) it is normal for an ag product to jump thru hoops to enter another country.

        I am a dual cit, UK/Canada and think Brexit is a tragedy that would be reversed if another ref was held. Note that main agit-prop actor Farage has retired and was seen in line up for an Irish passport allowing access to EU.

        The UK has not historically been a land of referendums and it was a mistake to hold one on a complex topic.

        A little know fact and threat: a whole bunch of EU companies have long agreed that contracts and disputes will be handled with UK, not national law, a tribute to UK law. There are 300, 000 people in the UK doing EU legal work. But when this comes up for renewal, it might not be, being opposed by France.

        Did lads at pub consider that before voting to protect the British Banger from Brussels? ( the EU said a sausage can’t contain bread crumbs. This should have gone to the World Court at the Hague lol)

  38. ivanislav says:

    Oil can’t stop won’t stop! Corn Pop’s got some ‘splainin to do.

    • Rowen says:

      Wall Street is rotating from Growth/Tech stocks to oil and other commodities.

  39. Page88 says:

    A quote about control of the money supply………..

    “GIVE me control of a nation’s money supply, and I care not who makes its laws.” So said Mayer Amschel Rothschild, founder of the Rothschild banking dynasty.

    Something to ponder.

  40. Dan Romig says:

    And on today’s Minneapolis newspaper, front page Business section:

    “Fed chief: Inflation a focus, not a fret. Still, Neel Kashkari says, rate hikes will be needed to slow things down.”

    In the interview with a good reporter IMO, Kavita Kumar, he adds, “If you look at the range of public forecasters, many of them are in the 2.5% to 3% kind of range for this year, which is a big improvement over 2021 but still too high. I think if we are really at the 2.5% to 3% range this year, it would give me a lot of confidence that inflation is heading back down to our 2% target.”

    Yeah, Neel is probably right, we’ll see inflation in the USA back down to the Fed target of 2% real soon, eh?

    Q: “How worried are you about inflation?

    A: “I’m focused on inflation but not worried about inflation. And I’m not worried about it for a few reasons. One is there are a bunch of structural things that should bring inflation down without the Federal Reserve doing anything. For example, we know the fiscal stimulus from the government is waning. That’s going to put less pressure on prices automatically.”

    • Winston says:

      That is hilarious.

    • Flea says:

      It’s called deflation

      • historicus says:

        Still waiting for an answer to this question..
        “Who has EVER SEEN DEFLATION?”
        Down ticks in inflation is NOT deflation.

    • Tom S. says:

      Kashkari was one of the more public foot on the accelerator until everyone is working again type. All these clowns are about to remember why it’s a dual mandate not a first one than the other. Chasing their tails already. Circular logic.

    • Depth Charge says:

      Kashkari is an MMT crackpot.

      • historicus says:

        and extremely ambitious…….and knows some secrets too….he was Hank Paulson’s hand servant in the 2008 mess.

  41. silverdog says:

    I’m familiar with Mexico as I travel down there a lot and have much family there.

    Inflation is a real concern for the average Mexican right now: fuel, food(tortillas/meat/etc) is very high and affects the average Mexican person in a big way. As I have mentioned before, fertilizer for farming has gone up 100%-250% depending on when you buy, seed is also at all time highs. Inflation is baked into the 2022 farming season, no matter what these central banks do, the fertilizer and seed have been bought at record inflated prices.

    Expect more rate hikes in Mexico as if inflation goes up much further you will have social instability. In other words the central bank needs to raise rates in order to preserve the society/government, etc.

  42. Willy2 says:

    – About defending the currency: Just look at what the USD did against the BRL since say 2013.
    – there could be a similar development with the USD versus the russian ruble. Raising rates = defending the currency.
    – Yes, I think it has become more likely that the FED will raise rates in february because the 3 month t-bill rate seems to go above 0.20% and stay there.

  43. Michael Engel says:

    The DOW is own because Putin & Shi live at the Winter Olympic open.

  44. Janna says:

    “The BOE expects inflation to surge to “around 7% in the spring.”

    Does our Fed have a future inflation prediction? Not saying I would believe them after the whole ” transitory” narrative, but it would be useful to see what they are thinking.

    Thank you for this article. It was fascinating!

  45. Michael Engel says:

    Champions league : Dynamo Kiev 4:1 Spartak Moskva.

  46. Abomb says:


    Could you do an article on wage inflation over the pandemic and maybe going back to some historical periods when inflation ran hot? After seeing this mornings numbers I’m just curious where we fall.

  47. Kunal says:

    – Crude prices are rising rapidly which implies more inflation coming our way. Gas pump prices were down a bit but I expect it to hit new highs this weekend and next week.
    – 10 yr bond yield also spiked by 6% meaning mortgage rates are gonna push to new 2 year high, closer to 4%.
    – This should all be depressing for Bitcoin but Bitcoin is rising by ~10%. Not sure what dynamics is at play. May be a segment of market does not believe in Fed while another does.
    – Everything is becoming expensive and everyone is raising prices even Starbucks, Amazon, Chipotle, etc.
    – Jan CPI reading coming next week, expect it to hit ~7.5%. A responsible Fed would immediately raise rates and stop QE at this level but it will again scratch its teeth and do nothing.

  48. Bobber says:

    I lack evidence to refute any claim the Federal Reserve has been a reckless laggard.

    From where I’m standing, it looked like they willingly assumed control of the economy and misinterpreted mandates by sacrificing long-term health of the economy by disregarding financial risks such as excessive debts, stock, and RE prices. It’s clear they lacked resolve to make difficult decisions when needed. So why did they insert themselves so prominently? Weakness is never a good companion to assertiveness. If you want to lead….then lead!

    • Tom S. says:

      They inserted themselves during the void of leadership when the SHTF.

      Lowering taxes and already having rates at 0 means they had an opportunity to try new policies, mostly for worse than for better. They should’ve said rates are 0 so we are going to ride this one out from a monetary standpoint.

      • Bobber says:

        They never should have let rates get anywhere close to zero. The chain of errors goes back decades.

        I’m afraid the Federal Reserve will not exit this next bubble with its reputation intact. There are just too many errors to cover up with spin, and the damage they’ve done is too deep.

        • historicus says:

          “I’m afraid the Federal Reserve will not exit this next bubble with its reputation intact.”

          Which reputation is that?
          I think they are confirming who they are and for whom they act.

  49. Mark R says:

    Great article. I would add that the December producer price inflation figures in many places (US 9.7% yoy, China 10.3%, UK 9.3%, Germany 24.2%, EU 26.2%, Poland 14.2%, CZ 13.2%) are all feeders into rising CPI in H1 2022. And the crude oil price spike we have seen year to date in 2022 (e.g. 18% on Brent oil) can be seen to be sustaining those PPI pressures well into this year. Real interest rates may well drop before the central banks have time to act.

  50. nick kelly says:

    Re: Russia’s Shock and Awe

    Their CB has done way more than this in past up into double digits. Ruble crisis? Which one?

    If they had a choice average Russians would have dollarized or euro-ed years ago. It’s illegal to pay in anything but rubles, even if as in swank Moscow joint, the menu prices are in US$ or euros!

    • Alku says:

      what do you mean by “if they had a choice”?

      • nick kelly says:

        What I mean is: ‘It’s illegal to pay in anything but rubles’
        The gov forces other currencies to be exchanged at its own very unfavorable rate. In Canada and want to pay in US$?: no prob. Before the euro all RE in Italy was priced in US$. The difference between a closed economy like Russia and an open one.

        • Alku says:

          Where did you get this information, I wonder? It sounds like 30 years old news.

          Yes, it is illegal to pay in anything but rubles – but it’s only applicable to cash payments!

          Nobody forbids you to keep your money in foreign currency account and exchange it to rubles as you go. The online rates are good enough.

          In a big city you might have even better rates if you raise cash from your currency account and use a cash exchange outlet.

          In addition, you can have a credit card issued to your currency account and pay with this card in all the places where it is illegal to pay in anything but rubles. In this case your currency will be converted to rubles at Visa/Master/.. rates which are even more decent.

        • nick kelly says:

          ‘As of March 2016, the ruble was devalued more than 50 percent since July 2014.[41]’
          No one keeps rubles as a store of value.

        • Alku says:

          Store of value was not even mentioned.

          I was only saying that your comment about having no choice to use foreign currency was only correct probably until 1990-s. But now it’s completely off.

          As an aside, wrt paying in USD in Canada – before COVID I liked to dive to Vancouver once in a while, and the shops at the border did accept US$ – but at the rate 1:1 to CAD :)

  51. DawnsEarlyLight says:

    It’s definitely time for an immediate .50% rate hike! But no, the fed does not see the train coming, because they are the train.

    • DawnsEarlyLight says:

      If the data is true from the BLS (cough cough), then the Fed has NO reason to not rate hike immediately!

      • historicus says:

        No real reason to wait til March…they have the power to do so…
        But the fact they Do Not is telling…..the arsonists are enjoying the blaze.
        If you were going to flirt with hyper inflation, what would you do?
        You would pump the money supply and keep rates well below the inflation rate. Even a guy who doesnt have an economics degree (Powell) might figure this out.

    • Peanut Gallery says:

      I think a rate hike larger than 50 bps is possible in March

  52. Brant Lee says:

    Yay, Amazon up $430 bucks at this moment. Now markets are 100% about dump n pump like crypto.

  53. Michael Engel says:

    1) Fri Job jab, but not a knockout. For entertainment only :
    2) AAPL is up on Ex date.
    3) GOOGL refuse to close the gap.
    4) MSFT > BB #2 : Aug 24/27.
    5) AMZN took off in a space capsule.
    6) FB stopped the meltdown.
    7) NDX bounced off the weekly cloud. NDX might form a large megaphone reaching : 17K – 17.4K, before plunging to the weekly cloud(18,52,104).

    • historicus says:

      ” 17K – 17.4K, before plunging to the weekly cloud(18,52,104).”
      Plunging “up”?

      • BeeKeeper says:

        Just to clarify, 18 and 52 and 104 are 3 input values for technical indicator.

  54. Turtle says:

    “Brazil is one of a few countries were the policy rate is above the rate of inflation”

    Novel concept!

    • nick kelly says:

      Russia and Brazil have this in common and it isn’t concern for citizens: they both have very iffy currencies. Russia in 2007 raised its rate to I believe 17%.

      Given my choice I’ll take Brazil’s over the ruble.

  55. On the bright side: GDP and employment growth are very good.

    I can see why the FED is only reluctantly shutting down the party.

    • historicus says:

      Shutting down the party? How many are on the outside of this party? (fighting inflation in food and housing)
      The party should never have gone on this long…and btw, the “party” was supposed to be an “emergency response” to COVID…but you’re right, it became one big speculation party.

  56. truth says:

    Trend seems to be Biden is in Powells Hands Now
    Biden on the Air today about how great everything and he are doing in the old USA. It’s interesting How People in Power and the Rich are Deaf and Blind, and the People are like Guide Dogs with no Trail / Path and running out of Food /Power & Gas.
    We all know what’s more important the (1) New President Or (2) Inflation back in control.

    The last 2 Presidents worked hard to develop the current Mess, so I doubt they will continue to hold the Guide Dogs, the people. When and if these $200,000 to $300,000 overpriced homes begin to go into to default and the belly of the banks are exposed
    the feast may begin.

  57. EH says:

    Here in indonesia, the official rate of inflation is 2%, but it doesnt reflect the reality on street. The price of food is the same but the size of everything (from tofu to noodle) is half what it used to. Not mentioning slightly luxury goods like pork (+100% yoy), milk (+40% yoy)

  58. historicus says:

    Notice the Fed now has gone from “addressing a problem” (COVID SHUTDOWN and its effects) to “being the problem” (hyper inflation, asset bubbles, massive increases in the money supply, and ridiculously low interest rates?)

  59. Native NYer says:

    Regarding the spike in oil prices: It is my understanding that one of the last times oil prices spiked was in August 2008 when the Summer Olympics were being held in China.

    An explanation at the time for the increase in oil prices was that China was substituting oil for coal so that air quality would be better.
    Could a similar phenomenon be going on now?

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