How to read the chart: (Sourced here)
Red-blue-green from left to right is arbitrary, implying 0 to 3% is a good normal and it doesn't tell you which dots are old and which ones are new. The exceptions to that are below:Near the middle, are a few connected dots for Aug/Sept 1929Just above is a connected loop of orange dots showing the Tech Bubble 1998-2001.
Above that is a connected line of brown dots showing 2014 to the present, our current trend line.
At the top and off to the right a bit is a yellow dot for today at the end of the trendline.
That yellow dot is high for inflation but the shocker is the price people are paying compared to the earnings companies actually report. This hasn't been seen in the last century and a half.
John Mauldin writes:
"That suggests one of two things needs to happen: either inflation needs to drop dramatically or the stock market needs to drop significantly, or some combination of the two—at least from a historical perspective. Depending on how you measure standard deviation, we are somewhere between 4–5 standard deviations from the mean. Again, dramatically higher than the Roaring 20s (well more than double) or the tech bubble (more than 50% higher)."
All I see from Covid overspending is inflation coming out the ying yang for years.
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