Inflation is transitory? No, quite the opposite. Vertiginous credit expansion by the Federal Reserve, printing and digitally creating dollars over the last year and a half, guarantees rough times coming sooner than later.
From the new eviction moratorium to impending vaccine passports, the social breakdown of this once relatively free society will only further compound the economic ramifications of the rash interventions in recent years.
It’s as if two runaway freight trains are on a collision course with each other, one economic and the other socio-political.
The predominant engine certainly is the economic one, but the fallout from the crash will be all the more devastating if there’s no common cultural fabric or even a shared political consensus to cushion the blow.
In May 2020, two months after the Fed formally instituted ZIRP, its zero-interest rate policy following the outbreak of Covid mania, Fed Chairman Jerome Powell told 60 Minutes that he “simply flooded the system with money.”
In fact, around one out of every five U.S. dollars ever created was done so in 2020.
There’s a word for that, and it’s called inflation. Of course, he would like the public to only concern themselves with price increases, but actually, inflation is defined by “increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check,” as Ludwig von Mises noted.
In a more recent interview, Powell stumbled around attempting to explain how inflation (his version) will only be transitory.
“The concept of ‘transitory’ is that price increases will happen. We’re not saying they will reverse, but the process of inflation will stop,” he said.
Like the deceiver and manipulator he is, Powell then contradicted himself. “A price increase but not an inflation process” would be the consequence of his central planning, he said.
Despite media headlines such as “Inflation’s silver linings: higher wages,” the masses aren’t being gaslit so easily.
While the ruling class would rather stick to the age-old B.S. line about price inflation being the random product of the elements of chaotic nature, it’s working class folk with fixed income getting hit the hardest with the reality.
The prices of lumber, transportation, food, and gas have increased dramatically. Government checks are rolling in, whether in the form of “relief” for businesses and farmers, early 2022 child tax credits for families, benefits for the unemployed, or free rent for many tenants. Yet the latter never seems to catch up with the former.
Lockdowns and other economic disruptions set the stage for increasing the money supply, but there’s no grand policy that even pretends to aim at producing more goods.
Official denial can only last so long, so a “solution” must be crafted in advance. What are our betters working on?
For now, the only “solution” that TV proposes is how to vote in the next election cycle. But it’s probably about to get worse, with the rise of Modern Monetary Theory, which will create more problems and may lead straight to hyperinflationary conditions.
Combined with central bank digital currency (CBDC) technology, the road to the crack-up boom certainly seems to be the one we’re being taken for a ride on.
Ludwig von Mises described the crack-up boom in Human Action this way: “If once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size. For under these circumstances the regular costs incurred by holding cash are increased by the losses caused by the progressive fall in purchasing power. The advantages of holding cash must be paid for by sacrifices which are deemed unreasonably burdensome. This phenomenon was, in the great European inflations of the ‘twenties, called flight into real goods (Flucht in die Sachwerte) or crack-up boom (Katastrophenhausse).”
Plan accordingly.