Analyst: Inflation Could Hit 12% in 2023

Michael Wilkerson, the founder of Stormwall Advisors and the author of Why America Matters: The Case for New Exceptionalism, believes inflation could reach 12% later in 2023. Inflation peaked last summer in June at 9.1% and has been slightly decelerating over the past few months. 

According to Kitco, Wilkerson has three decades of experience working as an “emerging markets investor, M&A expert, and business leader.” Wilkerson noted that inflation still hasn’t caught up to M2 money supply growth.

“The money supply increased by 40 percent just from the year 2000,” he noted. “You’ve never had a time in history where the money supply increased by that much without it resulting in inflation… price inflation always catches up with money supply inflation.”

In an interview with Michelle Makori, Editor-in-Chief and Lead Anchor at Kitco News, Wilkerson called attention to how the M2 money supply has tripled since 2008, going from $7 trillion to nearly $22 trillion. He attributed this money supply increase to the government’s response to the financial crisis of 2008 and the Wuhan virus  lockdowns in 2020, which saw the federal government preside over massive economic stimulus spending programs.

To tame inflation, the Federal Reserve raised its policy rate by 475 basis points throughout 2022 and started selling off its assets. However, Wilkerson asserted that the Fed’s move was “too little, too late,” and argued that the Fed would not raise rates high enough to restrain prices.

“The Fed is going to run out of firepower,” he proclaimed. “This always becomes a tradeoff, ultimately, between tamping down on inflation, slaying the inflationary dragon, and allowing recession and unemployment to rise. And governments, always and everywhere… choose inflation.”

Wilkerson also believes that socio-political unrest is too much of a risk for the government to handle. Moreover, he views inflation as the “lesser of two evils,” from the perspective of an elected official.

The US economy is not recovering anytime soon nor is it going back to a state of normalcy. The political class and its penchant for easy money and overregulation have guaranteed this outcome. It’s going to take monetary restraint and downsizing of the government for the economy to stabilize and reach new heights of prosperity.

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