Ever since the crash in commodities began in 2011 and especially since the Fed initiated QE3 in 2013, I have felt that the Central banks have wanted commodities (input costs) to go lower and lower in order to support equities and keep the unwashed masses at bay.  Afterall, lower input costs mean more profits and it means food and energy are cheaper for the little guy.

when you look at stock indexes,  on a weekly and monthly basis they haven’t even been scratched and are really only barely off their all time highs.  Commodities on the other hand are at 40-50 year lows, and look to be going lower.  So in REAL terms, US equities have the highest purchasing power in perhaps the history of mankind.

None of the liquidity that the bankers have dumped into the markets have ended up in commodities.  I think that is by design.  They may say they want higher inflation, but that is a lie.  Yes they want inflation of financial instruments, but they absolutely do not want inflation in input costs and things like food and energy.  They know the economy would collapse if they let commodities rise and that a lynch mob would be coming for them if they let the cost of living spiral out of control.

I do know one thing, they are setting up the conditions for massive shortages in the future.  I have no idea if I will be alive to see it, but it is an inevitable outcome of what they have done to commodities.

And just when the Fed needed another excuse for a massive liquidity injection, along comes the Coronavirus.  Pretty convenient wouldn’t you say?