Inflation is busting out. The 7.9% claimed as the current U.S. yearly rate of inflation is but a minimum bid on the true reality (which is certain to be much higher than what the government reports).
The various powers that be are busy pointing fingers of blame for these horrendous inflation readings in every direction but the right one; at themselves. And, they are more focused on blaming others instead of fixing the problem.
The true source of inflation is excessive money printing and deficit spending. The past two years have been unlike anything in history on both fronts. Clearly, for anyone looking, it did not start with a Putin military buildup outside Ukraine per the current narrative.
So, it’s time for everyone to let go of the idea that things will somehow magically revert to how they were before. It will not get better. So, it’s time, instead, to plan as if several decades of really bad decisions, false ideas and fake narratives are finally coming home to roost, which they are.
Despite the seriousness of the topic, was great to see the “Intro- Take 2” at the start. I’m always amazed how you seem to freestyle everything with such ease and style, so it’s nice to see some outtakes
My comment. That we are discussing the Central Banksters is telling in itself. We are in what Adolph Hitler called “the Bankster’s Thrall”. Hey BLM, want to be even more edgy? Read “The Program of the Party of Adolph Hitler” by Feder and find out why he was 1927 Times Man of the Year. A nation is not a person. It is not morally bound to honour it’s contracts. Saxons, just liquidate the Banksters Thrall. How hard would that be? Not hard at all. Just pass the hat around for the Colonels.
Great video. I am glad that I became a member recently as I have learned so much and I realize that we have very little time left as the elites continue on the current course to destroy the economy and possibly civilization.
Here is an excerpt from Chief Lyons warning the world back in 2011: https://www.youtube.com/watch?v=2eJ0Ym3zQTI
Interesting in many regards. My field of study was economics, and I can discuss inflation all day long. Ultimately though, I lean toward the Austrian school in that I view all economics through the lens of human behavior. There are two initial responses to rising prices [ not necessarily the same thing as inflation ];
Raise your own prices. For those who are in the position to do so, 'passing the pain' down the line of consumption is the logical response. We all see very clearly how, quite often, products are "repackaged" with promises of being "newer" and "better". But when we open it up and get into the product, we find there is less of it at the same price. Access is reduced, or products "shrink", while the price remains the same or higher. This is a deceptive practice that attempts to get around the resentment and ill-will of the consumer by fooling him. We find that the Keebler elf isnt really making cookies to spread sunshine and happiness, but behind that façade is a shrewd team of marketers, programmers, and presenters who view their customer base as a 'mark' or obstacle to be maneuvered around in their quest to reach his pocket. On the more honest side of the scale, we have those who simply raise their prices directly rather than attempting to frame the increase as a boon to the consumer. This is becoming rare.
Reduce consumption. For those not in the position to raise their own price, the alternative is to reduce consumption. Logically, it starts with the least essential products and moves down towards the essentials. So; gym memberships, restaurants, movies, monthly pay memberships for nonessentials, etc are the first to feel the pain. Next comes that nice but unnecessary addition on the house, the new kitchen etc.. Much like Chris's 'primary, secondary, and tertiary' wealth scaffold, we can break products and services down along the same lines. When people get squeezed, their consumption draws inward, away from the tertiary or 'nonmaterial' and towards the primary or essential [ food, fuel, housing, etc ].
Because every producer is also a consumer the tide of reduced consumption ALWAYS over takes the force of rising prices. As the old saying goes "the cure for rising prices is rising prices". The truly shrewd players will raise their own prices while simultaneously reducing their consumption. Charge more for their service while planting a garden to avoid paying more for your tomatoes, etc. So there are always more people reducing consumption than raising prices. You get mass unemployment and busted businesses which reduce consumption further. Inflation, ironically, can trigger a downward deflationary spiral.
In a wealthy country like the US the reduction in consumption can reach all the way down to essentials. Most of us consume more food, fuel, etc than we need. We live in houses that are much larger than we need, and etc.. So we have a long way down.
The argument that government can keep printing and raising prices falls apart when we consider the function of VELOCITY of money. As prices go up, consumption goes down, velocity slows and that newly printed money gets stuck in the bank. Without a massive UBI scheme there is no way to get that money into the hands of the public. And I believe that if we were to really get down into the nuts and bolts of a UBI scheme that large, we would find that scope and scale to be preposterous. There is simply no way to replace the current economy with it. The whole thing is almost guaranteed to fall apart.
To start with, I am a new subscriber, although I have known about the existence of PeakProsperity for years. But recent events caused me to look more closely and explore alternative sources of news.
So, I found the video highly interesting and informative, but I have some issues with the presentation because I think they detract from the purpose you state of just presenting the facts and letting people decide, because your main point is compelling - that things can’t continue the way they are while deficit spending continues. I found things troubling me as I listened so I took notes and I’ll try to go through them in order.
The video starts with: “Inflation is spiking but the Federal Reserve is unwilling to do anything about it.” After listening to the whole thing it seems like the video spends a good deal of the video actually explaining that the Federal Reserve is doing something about it, namely by pulling back its purchase of Treasuries and raising interest rates. The Fed clearly isn’t doing what you think it should but they are not “doing nothing”. I get that the main argument of the video is an indictment of the wanton printing of money but this mischaracterization I fear could cause some to miss that overriding point.
I was bothered by the first example of inflation highlighting Turkey’s 50+ percent rate. Clearly this gets attention, but its inflation is a rather unique example, caused in large part by Erdogan’s refusal to allow interest rates to rise causing a collapse of the Turkish lira. So while an interesting subject for another story I think it is a poor example to lead with in a story about US inflation.
While the argument that we’re losing if we place money in a savings account makes the basic point about inflation, surely nobody listening to this video has money in savings accounts for any reason except readily available cash, since interest rates in savings accounts have been similarly low for years (decades?) now.
The video is confusing because you state in one minute that the Fed’s job is to defend Wall Street yet make the point that they are not following Wall Street’s advice of stopping all QE and raising interest rates immediately. Or that the Fed has folded and is doing nothing about inflation while at the same time talking about the steps they are taking to address it - albeit steps you feel are too timid. For instance the video is dismissive of the initial quarter percent interest rate rise, but fails to mention future rate rises expected this year through 2024.
The video states that Powell deserves a “Liar liar pants on fire” for blaming worsening inflation on Ukraine. Did he blame all worsening inflation on the conflict? I looked up the Fed’s February report on its monetary policies and found it literally starts with “U.S. economic activity posted further impressive gains in the second half of last year, but inflation rose to its highest level since the early 1980s.“ I did further reading of a variety of news sources and the general view is that the Fed is concerned about possible volatility in markets due to the invasion, and this may affect decisions going forward. 6) “Main Street small businesses, medium sized businesses, households. They didn’t get supported by any of this bond buying action by the Fed.” There may be an argument that the result wasn’t what was hoped for, but again a little research reveals that Fed spending was intended to directly support all ranges of businesses including small and mid-sized ones - through the Main Street Lending Program, the Municipal Liquidity Facility, and the Paycheck Protection Program Liquidity Facility. https://www.brookings.edu/wp-content/uploads/2021/03/Pandemic-era-Federal-Reserve-Facilities.png
I am concerned that this wasn’t mentioned.
In general, I understand your focus is rightfully on deficit spending but to have a discussion about inflation without once even mentioning increased demand and supply chain disruptions, even if only to point to other discussions you have had about them seems an oversight - because the common narrative is just that.
So hey, really interesting video but I found the issues I mentioned above detracted from what I believe are your main concerns. I worry others who aren’t familiar with your positions would be turned off by them and dismiss your entire message, especially if it counters the “truths” they have been taught to believe. Sorry for the length of this but it was an interesting process. I look forward to other posts in PeakProsperity as I decide what subscription level I want to participate at.
Excellent presentation and analysis. 100%! But no worries, Central Bank Digital Currencies hooked to digital passports will save us from triple-digit inflation, which is looking inevitable, because seemingly planned. Isn’t that what they’re designed to do? And how could anyone say no to that? Don’t you want to be saved?
You are correct that Chis mischaracterizes the degree of inflation and whether Jerome Powell is doing anything about it. We should be used to that. Chris is a long term Fed hater.
Some of you may not be old enough to remember the inflation of the late 70s, early 80s. One of the few things Ronald Reagan did right was appoint Paul Volcker to the Fed chair. In 1980 inflation peaked at around 13.5%. Volcker knew what to do about it. He raised interest rates to close to the inflation level. Mortgage rates went over 18%.
Now, Chris characterizes the current inflation as “raging.” Not so much compared to 40 years ago. Of course, predictably, when Volcker raised interest rates he brought on a two year recession. That’s the price you pay when when you raise interest rates. Of course, it also wrings inflation out of the economy. If that happens in this instance, I assume Chris will blame the Fed if we get another recession with rising interest rates.
The evidence seems clear that deficit spending brings on inflation. When Reagan took office the national debt was less than $1 trillion. Reagan more than tripled the debt in his two terms and Bush I added another multiple. Since then the debt has increased in every administration except for the last few years of the Clinton administration.
Of course, since the ‘Great Recession’ deficit spending has become a feature of the economy in order to stimulate the economy. And, surprise surprise, it worked. Then, during the Trump administration and especially since covid, the debt really took off. The national debt is now at $30 trillion. Half of that has been added since the beginning to the Trump administration. And, again, the economy has been counterintuitively strong.
Debt expansion since 1980 failed to increase inflation over most of the last 40 years. My take is that debt didn’t increase fast enough during this period to trigger inflation. Well, in the last five years, as noted above, debt has taken off. IMHO, deficit spending during covid is the straw that is breaking the camel’s back and creating inflation finally.
As pointed out by Mcconnor1776 Powell is raising interest rates to address inflation. Chris may be right that he isn’t raising interest rates fast enough. We’ll find out soon enough and if it doesn’t work, he can raise them faster. Of course the faster he raises rates, the more likely we enter recession. It’s a balancing act and Powell is trying to get it right.
But, at any rate, this isn’t the time to panic. Make sure you’ve insulated yourself against economic hard times and you should be fine. We have economic collapses from time to time and we always live through them.
