Currency induced cost push inflation spikes are best illustrated in the chart below. Notice the pattern of increasing spikes from 1963 to 1980 in the PP to PMI ratio. This pattern illustrates the cycle between hemorrhage and liquidity. Expect a similar cycle, i.e. pattern, from 1999 to 2015 as the US attempts to muddle through the sovereign debt crisis. Unfortunately for Americans, the muddle through strategy of currency devaluation to mitigate failing debt will fail (to some degree) towards the end of the cycle 2015. The turning point should be 2013-2014.
ISM Prices Paid Index (PP) to National Purchasing Manager's Index (PMI) Ratio:
Headline: IMF lowers U.S. economic outlook
The International Monetary Fund on Friday lowered its forecast for U.S. economic growth, and warned that risks to the global recovery have increased.
In the latest update to its World Economic Outlook, the IMF said it expects the U.S. economy to expand at an annual rate of 2.5% this year and 2.7% in 2012. That's down from projected growth rates in April of 2.8% and 2.9%.
The U.S. government said last month that the economy grew at an annual rate of 1.8% in the first quarter of 2011, down sharply from 3.1% in the final three months of 2010.
The slowdown in the first quarter was due partly to "transitory factors," the IMF said, including higher commodity prices, bad weather and supply chain disruptions due to the March earthquake and tsunami in Japan.
Source: finance.yahoo.com
