Inflation means inflation whatever passes for the money supply. Inflation has varying effects on the general price level and on specific prices. That said, if you inflate the money supply like developed world governments and their central banks have been doing the last year, it’s a pretty good bet that it will drive up most prices. From Michael Snyder at themostimportantnews.com:
If you thought that authorities all over the planet could print, borrow and spend money like there was no tomorrow without any consequences, you were being delusional. Since the beginning of the COVID pandemic, we have witnessed the greatest monetary binge in world history. Of course that was going to cause enormous problems. Of course that was going to cause nightmarish inflation. Anyone with an ounce of common sense should have been able to see that. When the value of money is tied to nothing, “more money” is always such a tempting solution for those in power. But as history has demonstrated over and over again, going down that path almost always leads to tragedy.
In our case, it will be the poorest people on the planet that suffer the most. According to Bloomberg, basic food staples are dramatically spiking in price all over the globe…
Global food prices are going up, and the timing couldn’t be worse.
In Indonesia, tofu is 30% more expensive than it was in December. In Brazil, the price of local mainstay turtle beans is up 54% compared to last January. In Russia, consumers are paying 61% more for sugar than a year ago.
And as Albert Edwards has pointed out, annual inflation in cereals has hit 20 percent, which represents “the highest annual rise since mid-2011 when the Arab Spring was in full flow!”
If prices continue to rise like this, it is just a matter of time before we see widespread food riots all over the globe.
Maybe Texas wasn’t prepared for cold weather because those in charge believed global warming predictions. From F. William Engdahl at globalresearch.ca
In the unfolding extreme winter tragedy in Texas as well as many other regions of the United States not prepared for severe winter weather, a notable point is that much of the vast windmill batteries across the state, supposed to generate 25% of the state electric power grid, have frozen and are largely useless. The recent severe winter weather across not only the continental USA but also large parts of the EU, and even the Middle East, warrants a closer look at a subject that has been too long ignored by the UN Intergovernmental Panel on Climate Change (IPCC) reports, as well as by a new group of academics known as Climate Scientists. That is, the influence of our sun on global climate.
Cold Climate Change
On February 14, 2020 a record Arctic cold front swept from Canada far south to the southernmost parts of Texas on the Mexican border. The immediate impact has been power outages for up to 15 million Texans who as of February 17 remained without heat and electricity, as almost half the wind units were frozen and inoperable from ice storms, many permanently. Texas over the past five years has doubled its share of wind generation to the grid in a rush to adopt a green energy profile. With some 25% of the state electric grid from wind sources, almost half that is out of commission, many permanently, from the storm.
Tyler, Texas, once known as the “Rose Capital of America,” saw temperatures of near -20 C.
Gas processing plants across Texas are shutting as liquids freeze inside pipes further reducing power just as demand for heating fuel explodes. Heating fuel prices in Oklahoma jumped 4000% in two days and are rising. Wholesale prices for delivery in Texas are trading as much as $9000 per mega-watt hour. Two days before the storms price was $30. In a summer peak demand, a price of $100 is considered high.
Reduced gas supplies from Texas to Mexican power companies have led to blackouts in northern Mexico, with almost 5 million households and businesses left without power on February 15.
It’s not like the world hasn’t witnessed plenty of socialism’s horrific failures. From Richard M. Ebeling at aier.org:
It is amazing sometimes how really short humanity’s historical memory can be. Listening to some in American academia and on social media, you would think that socialism was a bright, new, and shiny idea never tried before that promises a beautiful future of peace, love, and bountifulness for all. It is as if a hundred years of socialism-in-practice in a large number of countries around the world had never happened.
If the reality of actual socialism in the 20th century is brought up, many “progressives” and “democratic” socialists respond by insisting that none of these historical episodes were instances of “real” socialism. It was just that the wrong people had been in charge, or it had not been implemented in the right way, or political circumstances had prevented it from getting a “fair chance” of successfully working, or it is all lies or exaggerations about the supposed “bad” or harsh” experiences under these socialist regimes. You cannot blame socialism for there having been a Lenin, or a Stalin, or a Chairman Mao, or a Fidel Castro, or a Kim Il-Sung, or a Pol Pot, or a Hugo Chavez, or . . .
Tyranny, terror, mass murder, and economic stagnation, along with political plunder and privilege for the few at the top of socialist government hierarchies were not indicative of what socialism could be. Just give it one more chance. And, then, another chance, and another.
Broke governments are going to be even more unbelievably rapacious than they are now. From Doug Casey at internationalman.com:
International Man: President Biden’s Treasury Secretary—and Obama Fed Chair—Janet Yellen recently floated the idea of taxing unrealized capital gains through a “mark-to-market” mechanism.
What is going on here?
Doug Casey: When you tax unrealized capital gains—as they do with foreign stocks in a number of countries, like New Zealand, where it made my life expensive and miserable while I was living there—any stock market assets that you have are marked to market annually. This is a big disincentive to own them because whether you sell the asset or not, you’re going to pay taxes as if you’d sold it.
This is why very few Kiwis own foreign stocks. They’re liable to be taxed on gains, whether or not they sell and actually pocket the gains. I presume that’s what Yellen is talking about. It would make it pointless to buy a stock like Berkshire Hathaway and just hold it for decades to escape capital gains taxes. But the bright side is that if this law was in force, Warren Buffett would no longer be able to whine about the injustice of paying fewer taxes than his secretary.
I question whether the proposal will be enacted, though, simply because it’s so stupidly destructive. It’s clear that Yellen needs to collect on some more six-figure speeches to gain a proper understanding of it and get off that hobby horse.
A real humanitarian would say why not $10,000 an hour, but we’ll start with PF Whalen’s modest proposal. From PF Whalen at bluestateconservative.com:
The periodic debate regarding raising the minimum wage has resurfaced once again, only this time the argument is connected to the larger discussion surrounding a sprawling, $1.9 trillion COVID relief bill; for some inexplicable reason. In the bill unveiled by House Democrats last Friday, if passed, the minimum wage would increase incrementally from the current $7.25 per hour to $9.50 per hour this year, and eventually escalate to $15 per hour by 2025. Prominent Democrats across the board have supported the idea, including President Joe Biden.
If we deep-dive the issue in trying to understand its full impact, we can learn a great deal about the pros and cons of increasing the minimum wage; particularly with the cons. But there are two pieces of information that are difficult to come by. How, specifically, did we arrive at the number of $15? And, based on the Democrats’ reluctance to acknowledge the negative impacts of a minimum wage increase, why don’t we just add a zero to the number and increase the minimum wage to $150 per hour?
Sen. Bernie Sanders (I-VT) was the first influential public figure to float the idea of a $15 minimum wage, having proposed the idea all the way back in 2015. Sanders’ plan pointed out his perceived benefits for those who are being paid the minimum wage. Beneficiaries would see an improved standard of living; the burden on taxpayers from food stamps and Medicaid would be reduced; and an increase in available income would spur economic growth. It sounds like a wonderful plan.
Bubble markets generally crash back to their point of lift off, which can mean an over 90 percent drop. From Charles Hugh Smith at oftwominds.com:
Needless to say, few are expecting bubble symmetry to manifest now, because, well, of course, “this time it’s different.” Indeed. It’s always different and yet always the same, too.
Let’s indulge in some basic logic:
1. All speculative bubbles pop, regardless of source, time or place. (100% of all historical evidence supports this.)
2. The current “Everything Bubble” is a speculative bubble.
3. Therefore the current speculative bubble will pop.
Now that we got that out of the way, the question becomes: how will the crash play out? There is no way to forecast precisely when or how the current speculative bubble will crash, but history offers a few potential templates.
The dot-com bubble offers a classic example of bubble symmetry and scale invariance. (See chart below.) Note how the bubble arose in two legs of X duration and it crashed in two symmetrical legs of X duration. In both legs, the crash returned to the same levels from which the bubble took off.
Scale invariance: this same symmetry is visible in bubbles that soar and crash in 6 days, 6 months or 6 years. The symmetry also holds whether the instrument soars from $1 to $5 or $100 to $500, or whether it is in index, commodity or equity. (See charts of Cisco Systems (CSCO) in 2000 and Tesla (TSLA) in 2020 below.)
Central Banks are holding trillions of dollars in fiat debt instruments issued by governments that will never be repaid. From Egon von Greyerz at goldswitzerland.com:
Akhlys, the Greek goddess of Misery and Poison, is exerting a major influence on the world currently. And sadly the dosage of misery and poison will increase in coming months and years.
What is now crystal clear is that this excess dose of fake assets and fake liabilities will totally poison the financial system and the world economy.
As Paracelsus, the renowned 16th century Swiss physician said; “all things are poison, it is the dosage that makes it either a poison or a remedy.”
When a world already in trouble was hit by a severe financial crisis in September 2019, the dose of debt was already excessive. But as the Fed and the ECB opened the money spigots fully, they filled the world with poisoned or fake money. The BY team (Biden & Yellen) will now be certain to finish this process with their profligate spending plans.
MAJOR CENTRAL BANKS BALANCE SHEETS UP 6X SINCE 2006
The financial system has been poisoned for decades by governments’ excess spending and central banks’ prodigal printing of toxic and worthless money.
And now, with Covid, they have the perfect excuse to senselessly create trillions of dollars, euros, yuan or yen. The world doesn’t realise that this money, fabricated by pressing a button, is no different from the Monopoly board game money.
Central banks’ profligate production of fiat debt liquidity is behind the Gamestop fiasco and stock market valuations completely untethered from underlying economic value. From David Stockman at David Stockman’s Contra Corner via lewrockwell.com:
Today, especially, the “idiots at work” sign should be flying high over Capitol Hill.
We are referring to the boisterous congressional hearings about who is to blame for the crash of GameStop, the alleged nefarious machinations of the hedge funds and Robinhood and the purportedly innocent victims in mom’s basement who thought call options were the greatest new video game since Grand Theft Auto IV.
But among today’s silly foibles, the incessantly repeated idea that the Reddit Mob was a victim of a “pump and dump” scheme surely takes the cake. If these people were stupid enough to think that the value of a company dying in plain sight (i.e. GME) could go from $400 million to $23 billion in less than six months while its reported finances continued to deteriorate, they deserve to loose every dime of the stimmy money they threw into the Robinhood pot.
Still, the fact that the greedy, dimwitted Reddit Mob got its just desserts isn’t the half of it.
What was really on display Thursday in the recently christened (since January 6th) Holy of Holies of American Democracy is the utter cluelessness on both sides of the political aisle with respect to the financial elephant in the room: Namely, that the Fed has transformed Wall Street into a giant, destructive gambling den, which is now sucking a growing share of the populace into the pursuit of instant get-rich speculations that have no chance of panning out.
A lot of highly touted new technologies and developments are supplying things the market isn’t demanding. From The Zman at theburningplatform.com:
One of the first lessons in economics is that demand drives supply. The more a product or service is desired, the greater the supply of it, barring some artificial constraint on supply. The relationship between supply and demand is expressed in the price for the good or service. A rising price means demand is outpacing supply and a falling price means supply is outpacing demand. If demand falls low enough, supply will disappear as there is no profit to be made in the transaction.
Supply and demand used to be an article of faith in capitalist countries, but it seems that our rulers have abandoned that axiom. Take for example labor markets. They insist that flooding the American labor market with new people from abroad will lift wages and increase employment. All that diversity will cancel out the collapse in demand relative to supply and something will happen. With regards to the labor market, the new article of faith is that unlimited supply drives up demand somehow.
Now, a lot of people think this new universal truth about the labor markets is just a trick to fool people into voting away their inheritance. Collusion between the cheap labor lobby and the cheap voter lobby has resulted in this weird libertarian argument that the old axioms about supply and demand do not apply to labor markets. That way heritage Americans will not resist the flood of foreigners into their country. That could be true, but it is not an isolated example of this new economic law.
The Biden administration can shuck, jive, and dodge, but there’s no escaping America’s catastrophic finances. From James Howard Kunstler at kunstler.com:
The absence of the big orange You-Know-Who at center stage of American life has changed the mood of the scene from a five-alarm fire to just another day in a collapsing civilization. Texas went medieval after an ice storm took the power down for millions, with ramifications accreting by the hour — especially the countless burst water pipes that will take forever to repair. (How many plumbers are there in San Antonio?) Food went scarce overnight. People died in their cars. The political blowback has barely registered yet, except for Senator Ted Cruz slinking back home from a luxury resort in Cancun, whoops, and Beto O’Rourke shooting his mouth off like a cholo with a Saturday night special at a low-rider parade on Cinco de Mayo.
Covid-19 cases are going down fast across the country. If it actually goes away, imagine the giant hole left in the national narrative. No more arguments over lockdowns, kids could go back to school to learn about the scourge of whiteness, and Americans could see each other’s faces again. The “progressives” in power would have to hunt up some new reasons to cancel the bill of rights. That shouldn’t be too difficult for a party adept at making shit up. Right wing extremism would be my bet, even if Antifa and BLM go back to partying in the streets like it’s 2020 when the weather warms up.
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