Category Archives: Economics

Inflation Is The Kryptonite That Will End Our Decades-Long Monetary Policy Ponzi Scheme, by QTR’s Fringe Finance

There is no pain-free way out of the inflation mess. From QTR’s Fringe Finance via zerohedge.com:

The linchpin that allows the world’s nefarious central banking model to be so effective is that the commonfolk – the plumber, the electrician, the teacher, the bartender, bus driver or barber – don’t understand it.

Countless times, I have reminded my readers and listeners that the inflationary “machinery of night” blankets the most regressive tax possible upon the people who can least afford it, and does so in an extraordinarily convenient way for elites, politicians, central bankers and central planners whose titles and “jobs” hinge upon nobody questioning them and/or figuring out how the system works in the first place.

Today, the fabric of our modern banking world is held together by a logical fallacy of a system, wherein central banks are afforded the asinine luxury of being able to print infinite amounts of “money”, which is then disproportionately distributed toward the ruling class, billionaires, and elites, instead of the people who need it the most.

This shows up, literally, as a widening gap between the “haves” and the “have nots” that has widened consistently since the late 1970’s.

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These people hate you and think you are beneath them, by Marty Bent

The rulers always despise the peasants. From Marty Bent at tftc.io:

This is the epitome of what is wrong in the world right now

 

New Energy Regulations Will Make Every Room In Your House More Expensive, by Mike “Mish” Shedlock

Your government hard at work, making your life still more miserable. From Mike “Mish” Shedlock at mishtalk.com:

The Biden administration moves to make appliances more expensive and less effective.

Energy Efficient Home Image from Energy.Gov 

Energy Efficient Home Image from Energy.Gov

How to Make Every Room in Your House More Expensive

Ben Lieberman, a former staff member on House Energy and Commerce Committee, has an interesting Op-Ed in the Wall Street Journal on Biden’s regulatory overreach.

Please consider a a Regulatory Burden for Every Room of Your House by Ben Lieberman. That is a copy-free link, not behind the WSJ paywall.

  • The Kitchen. The Trump administration took steps to fix the Energy Department’s efficiency standards for dishwashers that had the unintended consequence of increasing the time to clean a load of dishes from an hour or less in older models to well over two in new ones.
  • The Bathroom. In one of several agency measures that limit freedom of choice, the DOE has tightened water-use limits for certain types of showers. In addition, for those who prefer incandescent light bulbs surrounding their bathroom mirror (or anywhere else), the DOE is targeting these bulbs with energy-efficiency standards likely to boost their price to $7 each, leaving LEDs as the only viable option.
  • The Laundry Room. Washing machines have been hit with multiple rounds of energy and water-efficiency regulations that have compromised performance and even forced some owners to buy and use special products to eliminate the stink that accumulates in the new models. Compliant dryers, like the new dishwashers, take longer to do the job.
  • The Basement. Your next new furnace may be significantly more expensive, thanks to regulatory changes percolating through the Biden DOE bureaucracy. Furnaces are currently available in natural-gas or electric versions, but the DOE is all-in on the war against gas, which environmentalists hate because it’s a fossil fuel and thus a contributor to climate change.

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Newsom Likens Railcar Thefts To “Third World Country” As Liberal ‘Law & Order’ Agenda Implodes, by Tyler Durden

Having turned California into a third-world country, California’s governor is upset that Los Angeles rail yards look like a third world country. From Tyler Durden at zerohedge.com:

Having shrugged off ‘mostly peaceful’ protests and reclassifying nonviolent felonies like shoplifting and drug possession as misdemeanours, it appears the increasingly progressive policies of Soros-sponsored DAs – especially in California – have come back to bite as a tsunami of violent crime has forced woke liberal leaders to face up to the reality that their voters (and more importantly donors) are facing every day.

California Gov. Gavin Newsom and his left-leaning comrades in the Golden State spearheaded the move to reform police departments and the state’s criminal justice system that allows people who shoplift or are in possession of drugs to be released from jail (or avoid it all together) with minimal consequences for their actions.

Newsom’s acquiescence to ‘progressive’ DAs has single-handedly transformed numerous metros areas into hot spots for violent crime, resulting in businesses and people packing up their bags and getting the heck out of dodge. 

For the longest time, progressives have denied their social policies contributed to the rise in violent crime.

But that is changing fast. Along with NYC’s new mayor demanding federal aid to deal with that city’s crime wave, it appears Newsom’s statements about the wave of freight train looting in Los Angeles are very suggestive that his party is quickly recognizing their ‘law and order’ policies are miserably failing.

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Iran-Russia Hit Maximum Strategy, by Pepe Esobar

A lot of countries on the receiving end of U.S. hostility are making common cause together. From Pepe Escobar at unz.com:

Three ain’t a crowd: The Iran-Russia summit this week, concurrent with RIC military drills in the Sea of Oman, in advance of a Xi-Putin meeting in two weeks, suggests a rapidly-advancing strategic vision for the three Eurasian powers.

The official visit to Russia by Iranian President Ebrahim Raisi, at the invitation of Vladimir Putin, generated one of the most stunning geopolitical pics of the 21st century: Raisi performing his afternoon prayers at the Kremlin.

Arguably, more than the hours of solid discussions on geopolitical, geoeconomic, energy, trade, agriculture, transportation and aerospace dossiers, this visual will be imprinted all across the Global South as a fitting symbol of the ongoing, inexorable process of Eurasian integration.

Raisi went to Sochi and Moscow ready to offer Putin essential synergy in confronting a decaying, unipolar Empire increasingly prone to irrationalism. He made it clear at the start of his three hours of discussions with Putin: our renewed relationship should not be “short-term or positional – it will be permanent and strategic.”

Putin must have relished the torrents of meaning inbuilt in one of Raisi’s statements of fact: “We have been resisting the Americans for more than 40 years.”

Yet, much more productive, was “a document on strategic cooperation” between Iran and Russia that Raisi and his team presented to Russian officials.

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Bad News, I’m Afraid, by James Rickards

It will be a long time before supply chains get any better. From James Rickards at dailyreckoning.com:

The breakdown of global supply chains is well-known by now. Whether it’s finding groceries in your supermarket, buying a new car or buying appliances like dishwashers and refrigerators, goods are scarce. Also, deliveries take forever and choices are limited.

Many people wonder why the problem isn’t going away. Here’s the answer:

The supply chain is a complex dynamic system. When any complex system collapses, you can look for specific causes but that’s usually a waste of time. Systems collapse internally because they are too large and too interconnected and require too many energy inputs to keep going.

Any specific cause is more likely to be a symptom than a true cause. It’s frustrating, but that’s the answer.

Most Americans’ first encounter with the supply chain meltdown was in the spring of 2020 during the first wave of the coronavirus pandemic. Shoppers noticed that items like hand sanitizer and paper goods at Costco and other big-box stores were cleaned out.

It seemed that Americans who were locked down and quarantined at the time were hoarding these products because they had no idea when they would be allowed to venture out again.

The shortages were real, but were limited to specific products. The other aisles at Costco were stocked and so were all the other stores around (at least those that were allowed to remain open).

Now It’s Everything

But it’s not just Costco this time. It’s every supermarket, convenience store and other retail outlet from coast to coast. And it’s not just cleaning products and paper goods. Your local supermarket might have bare shelves for eggs, peanut butter, milk and other staples.

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Is the plan to bankrupt Russia working? By Paul Robinson

The Russian government’s finances are in a hell of a lot better shape than the U.S. and many European governments’. From Paul Robinson at rt.com:

Is the plan to bankrupt Russia working?

Economic coercion is the West’s favourite tool to influence Russian behaviour. But with oil prices rising, Russia’s economy growing, and the West backing off from pledges to exclude Russia from SWIFT, this policy seems to have reached a dead-end.

In 2014, the Russian economy was struck by a double-whammy. First, the oil price collapsed. And second, Western states imposed a series of sanctions in response to events in Ukraine. The immediate impact on Russia’s economy was dire, sending GDP plummeting.

Economists had problems determining which was more responsible for Russia’s problems – the oil price or the sanctions – but most came down in favour of the former. Cheaper oil translated into a less valuable ruble, which increased the price of imports and created inflationary pressures. To this end, the Central Bank responded with higher interest rates, depressing demand and thereby GDP.

The economic crisis of 2014 created hopes in the West that Russia could be brought to its knees. Pundits predicted that cheap oil was here to stay. Beyond that, the introduction of so-called ‘sectoral sanctions’, targeting Russia’s energy, financial, and military industries, was meant to strangle what were seen as the most vital sectors of the Russian economy.

It would not be long before Russia would be bankrupt, some claimed. Speaking in Ottawa in November 2014, former Russian Finance Minister Mikhail Kasyanov stated that within two years, Russia would have used up all its financial reserves and would have to severely cut government spending. The Russian people would then turn away from the government en masse. In the face of cheap oil and sanctions, the ‘Putin regime’ was doomed.

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Understanding the inflation problem, by Alasdair Macleod

Rising prices are not inflation. Inflation is expanding currency and bank credit, which in turn leads to rising prices. From Alasdair Macleod at goldmoney.com:

In recent weeks inflation has become a major economic concern. Nearly all the commentary emanating from monetary policy makers, economists, and the media is misguided, believing inflation is rising prices and must be addressed accordingly.

They are only the symptoms of inflation. The true cause is the expansion of currency and bank credit, which, reflected in the US dollar’s M2 money supply has increased substantially since March 2020, and now stands at nearly three times the level when Lehman failed.

After defining the differences between money, currency, and credit which together make up the media of exchange, this article explains how changes in the quantities of currency and credit translate into prices.

The solution to the inflation problem is not price controls, which are always counterproductive, but to return to a regime of sound money. This article shows what must be done to achieve this outcome and concludes that it is impossible to do so without a sufficiently serious financial and economic crisis to discredit government intervention in markets and to then allow governments to stabilise their currencies and reduce their spending to a bare minimum.

Defining inflation, money, currency, and credit[i]

A resolution of the inflation problem requires an understanding of inflation itself. It is an increase in the quantity of the media of exchange, whether it be money, currency, credit, or a combination of any or all of them. It is not a rise in the general price level. That is the consequence of inflation when the media of exchange loses purchasing power.

To avoid misunderstanding, it is important in any discussion about money to provide an accurate definition of what is money and what is not money. Let us clarify this at the outset:

That which is commonly referred to as money is more correctly any form of circulating media used for the payment of goods and services in an economy based on the division of labour. The term “circulating media” or “media of exchange” more accurately represents the common concept of money as the term is used today.

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The Greatest Crackup the World’s Ever Known, by MN Gordon

This is going to be the crackup to end all crackups. From MN Gordon at economicprism.com:

By now, anyone with half an inkling of curiosity about why prices and values don’t add up has traced the divide back to the money itself.  It’s not hard to see.

Asset prices, like houses and the major stock market indexes, have lost all visible connection with the underlying economy.  However, wage growth has stagnated; over the last 40 years low level wages have only increased by $0.32 per hour in real inflation adjusted terms.  Stocks and residential real estate, at the same time, have gone to the moon.

Even with the NASDAQ’s 11.2 percent decline from its all-time closing high set on November 19, the index is still up over 110 percent from its March 2020 low.  What will it take for the NASDAQ to crash back to earth?

Something else that has gone to the moon is government debt.  In 1980, the national debt was $908 billion.  Today it’s over $29.8 trillion.  That’s an increase of over 3,181 percent.  Over this time, however, gross domestic product (GDP) has only increased 632 percent – from $2.86 trillion to $20.94 trillion.

Of course, these are merely the facts and figures.  The effects to countless Americans are hard to measure.  But, by and large, the last 40 years have been a great disappointment for the American worker – and an absolute boon for the political elites.

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This Is Your Last Chance, Part Two, by Robert Gore

SWITZERLAND-POLITICS-ECONOMY-WEF

The biggest trend change in history.

Part One

Supposedly collectivists will reap the rewards of the only things they produce—destruction and death. After the collapse, a global collectivist government will replace the current multiplicity of collectivist governments. Most of the collapse’s survivors will become slaves living on subsistence doled out by the small aristocracy that will rule the planet. The real work will be done by artificially intelligent machines. The slaves will be pacified chemically and electronically through ubiquitous virtual reality technologies and monitored ceaselessly while the aristocrats live in unimaginable splendor. Those who resist pacification and enslavement will be “corrected,” or if that fails, murdered.

This is simply a straight line projection of the present and recent past that ignores a fully evident counter-trend still gathering steam. After a centuries-long, bull-market run, government as an institution has topped out. The plans and predictions of the global totalitarians are the overconfident rationalizations of newly minted millionaires at the top of bull markets—the “permanently high plateau” in 1929, the “new economy” in 2000, “house prices only go up” in 2007, and “the Fed’s got our backs” now.

We already have shining examples of totalitarian collectivist failure in really big countries with lots of people—the Soviet Union and Communist China. The former collapsed after tens of millions died, the latter made a mid-course correction towards more freedom after tens of millions died.

Blithering idiots attribute those failures to incomplete control by the totalitarians or claim collectivism can only work when the whole world is completely enslaved. They ignore the core quandary of collectivist control—it produces nothing. Collectivist governments steal, they don’t produce. A global collectivist government will produce exactly what the current multiplicity of collectivist governments produce: nothing. Yet, this government will supposedly build the world back better from the ashes of financial, economic, and political collapse.

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