Boring monetary policy discussion made.......very slightly less boring
Stop buying Chinese products. Start demanding things be manufactured in the USA. Stop with the notion that healthcare, housing, food, etc., is a fundamental human right. Demand our children understand the value of work and actually do the work.
Good call! I can't prove it (lost to the memory hole of Twitter) but many of us from around the world were discussing economic collapse in early 2020. It was apparent early on that the model the WEF and the corporatocracy our puppet governments are following cannot be sustained. We have been in a collapsing economic system for awhile - a big ponzi scheme.
Double-digit interest rates are impossible now. With $30T in debt, interest rates of 12.5% would require the FedGov to spend every dollar it collects in taxes on interest expense alone, leaving nothing for anything else. They've painted themselves into a corner with no way out.
I do not know how this will end, but I'm sure it's going to be VERY painful.
Is there any problem that Puddin' Joe can't make worse?
Great piece, thank you. I also thank Dr. Paul for gently shaking me awake in 2007, and I don’t think I’ll ever go back to sleep again.
And, I’ll just leave this here.
A general thought on the topic of inflation:
Printing more money is creating money without corresponding growth of value, which creates inflation.
Now then, increasing the value of stocks, options, and so on without the corresponding increase in goods and services with value does not increase inflation according to economic theory.
Unsurprising, really, since if we acknowledge that it doesn't matter who is creating more money without creating value (as opposed to creating more money by creating more value), we can no longer use 5/6 of the population as an inflations sink to protect the 1/6 that owns a/o controls virtually the entire economy.
And no, that's not an argument for planned economy - we know what that invariably leads to no matter if its planned by state or planned by private capital (king Leopold's private country ring a bell?).
Concerning schools of economic theory and what they leave out for one reason or other:
Austrian economy as well as the Chicago school fails at a very basic level: no real distinction is made between different types of value, such as real value (basic necessities) and monetary value; nor is any real distinction made regarding how such things that the individual simply just can't swap out immediately and freely - buying a pair of dentures entails a whole heap of different factors than does buying a pair of sneakers.
Of course, this is written from the experience of up until the late eighties implementation of neoliberal economic theory, where we in Sweden before that had a highly succesful combination of state economy and private economy - too succesful to be left well enough alone both by socialist democrats as well as neoliberal acolytes of Hayek, Nozick et al.
Which brings me to my final point: economic theory is social science, not natural science. As such, it's truths are situational and context dependant. What works in one sample does not necessary work in another one. That is the biggest weak spot for austrian as well as Chicago theories, and the whole shebang of "end of history"-based theorems: the all ignore race and culture and how that impacts the implementation of theory. Just compare Norway and Venezuela.
Both were poor (Norway was constantly mismanaged by danes and the by swedes up until 1905). Both have large deposits of oil. One is now prosperous and one is a disaster. Going with the prevailing theories on economy, it wouldn't matter if we swapped the populations around. But the norwegian oil industry ha always been heavily tied to the norwegian state, without any of the problems of Venezuela.
Because you cannot disregard race and culture (not to mention history and demographics) in economic theory, but since that is nigh on impossible to quantify (not to mention having been a 'hot potato' politically for more than half a century now) it instead gets left out.
Don't know if you've read Fukuyama's two bricks on the topic? I heartily recommend them to anyone interested in economy and politics beyond the graphs and tables and pur theoretical hypotheising so regrettably common in the field:
'The Origins of Political Order: From prehuman times to the French Revolution' is part one.
'Political Order and Political Decay: From the Industrial Revolution to the Globalisation of Democracy' is part two.
I'd also recommend Samuel Huntington's 'The Clash of Civilizations' on the off chance you haven't read it.
What is everyone's predicted "real" rate of inflation this year?
Is this not our puppet government crashing our economy to bits - like the other institutions - to foment / necessitate a “dire need” to implement cryptocurrency, available only on your wondrous smartphone? Is this not going to create a “thank you benevolent master” demand for UBI?
Don’t give up on those shot passports just yet.
The only big issue you missed is that, without any fanfare, the Fed has been buying debt at a rate pf $1.2B every month. It is prohibited by law from buying US debt directly from the US Treasury, so with a wink and a nod it waits until the debt is bought by someone else. THEN it buys the US Debt. This assures the market that there is a ready and willing buyer for any debt the US creates. Neat trick if you can get away with it.
This works safely because we have the world's reserve currency, which has no competitors . . . yet. I mean, who would trade the dollar for the Swiss Franc, the British Pound, the Chinese Yuan, the Euro or Bitcoin? Or a basket of the foregoing?
I am reliably told that this is now all Trump's fault, including the covid war crimes. I don't remember Trump doing any of the things the Washington Post said he did, but I don't understand subjective reality very well.
M. SimulationCommander and commenters ~
One thing I want explained to me is the inherent contradiction in Federal monetary policy: If the task is to maintain the value of the fiat currency, shouldn't the target inflation rate be 0 (zero), not 2%? After all, ANY price inflation IS, by definition, currency deflation. (Even Milton Friedman targets 2%, if I am not mistaken.)
What am I missing?
Thank you, M. SimulationCommander.
I hope it doesn't sound condescending, but this is the type of topic for which I've been waiting from you. I have so many comments in agreement, but you've basically said it all, so sorry for this frivolous post.
I think "stupidity caused by several generations of good fortune" (is there a Chinese character for that? Or an Inuit word?) is responsible for many of the things we see going on in the U.S. right now, including our general financial illiteracy. Can we come up with a catchy yard sign? Debt is real? Inflation matters? Or is receiving "free" money and low interest rates a human right?
Ducktales, LOL. This would be labeled dangerous misinformation today.
Sweet Vidalia onions are now $2.49/lb and some are rotten inside. They've always been 99 cents since I can remember.
I’m from Venezuela originally, moved to Houston on Dec 2000 and became an American citizen in 2013. I’m very grateful to this beautiful country and its people for the opportunity to work and raise our children here. I love the USA as much as I love Venezuela. What’s going on right now here is heart braking to say the least, all I can say is we have to fight it, there’s no other option, we can’t not let it happen here. I’ve been very vocal about it to all our friends, I’ve explained how I noticed that our schools here push the romanticizing of socialism every where they can, how our youth is being brain washed in academia right in front of us all while we ourselves finance this none sense. I just can’t believe it is happening all over again and that there’s still people with their heads buried in the sand worrying about the wrong stuff.
Your article is spot on!👍🏻