If Inflation, Why Not Christmas From Mexico?

The incidences of what’s downright bizarre have curiously become more frequent. Sign of the times. Pick your realm or timetable, there’s so much going wrong while completely disconnected from the “official” description of, or explanation for, whatever. Along these lines, did the US VP just warn America’s children from Singapore that Santa Claus’ legendary trade will be delayed, perhaps canceled?

Summer bummer from Ms. Harris:

The stories we’re hearing now about the warning that if you want to get Christmas toys for your kids, now may be the time to start buying them, because the delay could be several months.

While first blaming Climate Change for a piece of the puzzle (she’d fit right in at this week’s Jackson Hole gathering where central bankers who consistently screw up their mandate by having nothing whatsoever to do with money seek some other way to relate themselves back to that same economic mandate), the Vice President was really talking about the seriousness of supply chain matters.

Things are, we’re constantly told, not just good but inflationary good. After all, Jay Powell just might mention “taper” once on Friday!

Yet, outside of the US goods trade there is nothing at all in any way associated with good let alone inflationary. On the contrary, any broad survey of conditions from around the rest of the world apart from American retail sales (starting with American services) plainly indicates the very opposite of the stock market’s prices.

If you start with the premise the economy is booming, which is right where every single VP who ever served always does, then there must be something to explain why the economy is great or awesome but isn’t acting as such. On this current occasion, there’s the twofer: supply chain issues could explain both “inflation” as well as account for at least some part of ongoing macro digression.

But those are, in a very real way, also contradictory. Bottlenecks cause all manner of price adjustments – which we’ve seen in CPI’s if only in those of the US – but also huge opportunity. Any sustained, sizable gap between supply and demand unmet by existing supply will very quickly (on intermediate timescales) get filled by something else.

Outside of the world’s automobile sector, this is already happening as we noted not very long ago; from Walmart to Costco, the big retailers have already stocked up ahead of the year-end celebratory seasonality (which is probably right where VP Harris “heard” about the blaming).

So why isn’t the world on fire with enormous industrial recovery given purported fires of demand?

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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