More Signs of Inflation

Inflation continues to gain speed and cause problems in the market.

The highest inflation-adjusted borrowing costs since the 1980s are hindering U.S. companies’ ability to build their businesses.

Customers of Airgas Inc. are reducing purchases of industrial gases such as nitrogen and acetylene because of rising real interest rates, said Chief Executive Officer Peter McCausland. Real rates account for inflation or deflation.

“There is no question” high real rates have aggravated Airgas’s sales decline, he said in an interview.

You will start hearing more and more about "crowding out" of private investment cause the government sector will be lapping up all the available credit in the market.

Rising real yields may deter companies from borrowing to invest in new products or factories because deflation will erode cash flow and make it harder to service debt, said John Lonski, chief economist at Moody’s Capital Markets Group in New York.

“That’s almost guaranteed to delay an economic recovery and perhaps very much risks intensifying the current economic slump,” Lonski said in a telephone interview.

Get ready for high inflation and high unemployment. During the Carter years we called it stagflation. Well, here we go again.