Lesson learned never trust a banker or a politician. The issues are really affecting families while debts rise and the standard of living for many is deteriorating.

The Central Bankers are on course to try and bring inflation in line with their 2% target.  In reality, inflation is still excessively high and will not come down until spending is curbed and the excessive supply of money is withdrawn. The issue is that these leaders under the guise of a Pandemic have opened up the vaults and printing presses by spending money without accountability or transparency. As a result, no matter what the Central Bankers do, in this case, increasing interest rates exponentially, it will have a nil effect as they are only providing an illusion to people’s reality.

The CPI or Consumer Price Index  Data was presented at 6.5% in December vs (7.1%) in November. The Fed expects the labour market to remain strong. Why wouldn’t they, when people need to find whatever employment possible to pay their bills? Credit card debt isn’t at nominal rates, some can be considered extortionist. The expectations are for the Unemployment rate to rise to 4.5% from the present (3.5%). Further, the inflation target is 3.5% for 2023 with the projection to hit 2% by the year 2025.  By the time that happens, I will probably buy swamp land in Florida and eat Boa constrictors for lunch.

Jobless Claims improved to 205k versus expected (215k)  in America. On the other hand, last week’s Canadian employment improvement can be directly related to Government hiring. Private Sector hiring should be the baseline and barometer of the underlying economic performance, not taxpayer-driven jobs.

So what happens when the interest rate cycle ends? At present, The Fed gave us an indication that the rate increases will slow down from overly aggressive increases to possibly (0.25%) moving forward. Keep in mind, the strength of the USD was motivated by the signalling of rates increasing. The USD Index hit the 115.0 level at one point late in 2022. This statement has provided the stock market with positive momentum but I just don’t feel warm and fuzzy inside. Personally, it just looks and sounds like smoke and mirrors.

Today, the USD Index imploded toward the 102.0 level after the data was released. Presently it stands around the 102.50 level. Moving forward, the massive printing of money will only cause further devaluation. The only way to maintain the USD strength will be through words spoken. The Fed needs to keep the USD as the benchmark currency to maintain cash flow to service its debt. It will be difficult unless they get their house in order but why should they when the reliable taxpayer is on the hook for any losses incurred?

Meanwhile, the Chinese and Russians have combined to create a new currency that will be backed by precious earth and metals to maintain true value. Many countries are aggressively stockpiling gold as Precious metals have always been the basis of the true value of money.