US INFLATION: The 12% Gap the Fed Refuses to Delete – Why Interest Cuts They're a Fatal Mistake

[Igor Pereira]

Federal Reserve operates under a logical fallacy. They say they have a target of "average inflation of 2%", but the reality of the graph proves that they abandoned mathematics in favor of politics.

By Igor Pereira Financial Market Analyst

The autopsy of the "Steal of 12%" and why cutting interest now would be the final validation of currency destruction.

Let's translate what the graph shows into the reality of your pocket.

• The Target (Blue Line): If the Fed had fulfilled its promise to maintain inflation in the 2% trend since January 2020, the price index (CPI) should be at present in 291. 6.

• The Reality (Red Line): The actual CPI is in 326.0.

• The Robbery: There is a gap in 12% above the trend. This means that even if inflation falls to 2% tomorrow, you have permanently lost 12% of your purchasing power that will never be returned unless we have deflation (which the Fed will never allow).

Analysis is surgical: "There's no sense in having a goal if you won't adhere to it."

• The Medium Problem: When the Fed adopted the "Meta Média de Inflation" (FAIT) system in 2020, the promise was: if inflation goes too high, we will have a period below the target to compensate.

• The Betrayal: They let inflation explode, but now they want to cut interest once it touches the 2.6%. They have no intention of erasing the 12% excess. They are simply accepting a new, higher price level, effectively giving the dollar holders a cap.

Cutting interest with a 12% gap accumulated is throwing gasoline at the stake.

• Error Validation: If the Fed cuts the fees by 2026, they'll be telling the market: "Forget the 12% we stole from you. Let's make sure prices never fall."

• Risk of Resurgement: The red line on the chart shows a secular upward trend. Relaxing politics now, with unemployment at 4.4% but the core of the CPI still above the target, risks repeating the error of the 1970s: a second inflationary wave that will make the gap of 12% seem small.

The Fed is trapped between mathematics (which requires high interest to correct the gap) and politics (which requires cuts to save the government).

My Vision: They won't erase the gap. They will choose inflation to inflate government debt.

Action:

1. Gold ($XAUUSD): It's the only asset that fixes this 12% gap automatically. Gold is not investment; it is insurance against this graph.

2. Don't trust Pivot: If Powell cuts interest this year, he's signing a confession that the 2% target is a fake. Prepare for the accelerated devaluation of the Dollar.

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