If You Think Groceries Are Expensive Now… Just Wait

September’s 3% Inflation, the Fed's Fairy Tales, and Money Printing—All Over Again

The September CPI inflation report finally dropped yesterday after being delayed by the government shutdown. Both headline and core inflation came in at 3%—a full 50% above the Fed’s stated 2% target.

Now, frankly, we shouldn’t be too surprised. Going by the government’s own numbers, inflation has been moving in the wrong direction since April.

And yet, according to the CME FedWatch Tool, there’s a 96.7% chance they’ll cut interest rates by 0.25% at next week’s meeting on October 29.

Interestingly, before the inflation report came out, those odds were 98.3%. So the numbers barely budged even after we got confirmation that inflation is trending the wrong way.

Make it make sense.

The 2% Goal That Never Arrives

But here’s where things get, well, kind of funny. The Fed has a long record of promising to get inflation down to 2%. And their timeline is always the same: 18 to 24 months.

I kid you not.

On October 15, when asked point-blank when we’d finally get back to 2% inflation, Trump’s man at the Fed, Stephen Miran, said, “Probably a year and a half from now or so.”

A year and a half. Again.

They’ve been saying this exact same thing for the past four years. It’s become such a predictable dodge that a reporter finally called them out at the Fed’s last press conference:

Every year since 2015, the SEP (the Fed’s Summary of Economic Projections, its quarterly outlook) has forecast that you’d hit your target two years later. And this year, the SEP again says you’ll hit your target two years later. But 2% doesn’t seem to be anywhere in sight. Does that suggest the 2% target isn’t really achievable? And does this raise any credibility problems when you keep telling people that’s what you’re going to do—if you can never actually reach it?

Did Powell have a good answer?

Of course not. His response was classic Fed jargon—some mumbo-jumbo about how “no one really knows where the economy will be in three years.” You could almost see him biting his tongue to stop himself from saying, how dare you hold us accountable for being wrong every single time.

The Setup

If you’ve been with us for any length of time, you know the Fed isn’t just planning to cut rates next week—it’s gearing up for a one-two punch of inflationary policies.

First, the rate cuts themselves. As I mentioned, next week’s 0.25% cut is practically baked in. But there’s also a 96.3% chance they’ll cut again in December. That would bring the Fed funds rate down from today’s 4.25% to 3.75% by year-end.

That’s easier money, cheaper credit, and more fuel for inflation.

Second, as I told you in last week’s essay, the Fed is about to stop quantitative tightening. In Powell’s own words, they “may approach that point in coming months.”

But now it looks like it could happen even sooner.

JP Morgan, which originally predicted the tightening cycle would end early next year, just moved up their forecast. They now think the Fed could end it as soon as next week’s meeting. Bank of America appears to share that view.

This matters because, as you know, when the tightening stops, the money printing starts. That’s how it always works. And the way things are going, it’s a good bet the presses start rolling again in early 2026—kicking off an inflation wave for the history books.

Just remember what Powell said at the National Association for Business Economics conference in Philadelphia last week:

Normalizing the size of our balance sheet does not mean going back to the balance sheet we had before the pandemic.

Translation: the new “normal” is a $6.6 trillion balance sheet—about 60% higher than the $4 trillion pre-pandemic level.

With that much pandemic-era cash still sloshing around the system, double-digit inflation isn’t a risk—it’s almost a given.

Bottom line: we’re probably not going to see inflation fall to 2% for years—if ever.

The Real Inflation Everyone Feels

Let’s be real. When the government says inflation is 3%, the real rate is probably about double that—at least for the things regular people actually buy.

According to recent polling, 74% of Americans say their monthly household expenses have gone up by at least $100 over the past year. And 40% say they’re paying $500 or more.

And for most people, groceries top the list.

And this is all happening before the Fed cuts rates further and starts printing money again next year, mind you. So if you think groceries are expensive now, just wait.

You can call that a hunch if you want. But when the central bank is cutting rates with inflation at 3%, stopping its “tightening cycle” any day now, and gearing up to start conjuring up new money soon after—it doesn’t exactly require a crystal ball to see where this is headed.

Regards,

Lau Vegys

P.S. We believe the Fed’s inevitable return to the printing press will set off a massive bubble in commodities—especially in monetary metals like gold and silver. That’s why a big portion of our Crisis Investing portfolio is in mining stocks, which Doug Casey himself owns. Now, you might think you’ve missed the boat—but the precious metals just had a pullback, and as I recently wrote, mining stocks are still trading near their cheapest levels in relative terms.