With all the recent talk about systemic inequalities it’s helpful to remember the words of Milton Friedman: “Inflation is taxation without legislation”.
We’ve discussed a great deal in the past how inflation redistributes wealth to the asset rich and stratifies wealth inequality, but it’s more important than ever to remember that monetary policy is determined by a board of unelected leaders that sit a top of a bureaucracy utterly detached from the consequences of its rule.
As debt and spending continue to balloon to unprecedented levels, under an economic model that predicates itself upon consumption for the sake of growth, there is little doubt that the proponents of MMT will get their wish one way or another. During times like the present where growth dries up an enormous amount of liquidity injection and inflation are required to keep the ship afloat and begrudgingly moving forward.
Pay no attention to the “there is no inflation”-ites who refuse to believe that a free lunch is unobtainable. The cold hard truth is that CPI is an illegitimate metric, which can be easily tweaked to mask the real effects of diminishing purchasing power. John Williams has been tracking alternative, and much more realistic, measures of inflation over at Shadow Stats for quite some time. Even then, we must remember that real inflation is likely even higher as increased cost of goods must take into account the massive deflationary effects of the 21st century technology boom.
Deflation, in and of itself, can be a wonderful thing for society, but is very dangerous in an economic model that requires growth and credit expansion to sustain itself (the book of the month is particularly appropriate here). To fight this deflation, increasingly massive amounts of stimulus will be the norm. Capital controls and regulation changes for financial institutions will be entirely necessary to sustain the ponzi.
Rest assured, real inflation will come on like a freight train…because it MUST. The Fed must do whatever it can to create inflation now or face the ire of public officials as consumption stagnates. The question is not really “will there be inflation” but rather, “will they be able to contain the inflation without unleashing a Weimar like torrent of destruction”.
And don’t forget “we’re all in this together”. It’s worth stopping to consider the question, how much extortion of one’s wealth is slavery? 100% certainly by definition. What about 40%? 60%? 80%?
Welcome to Neo-feudalism where regressive taxes on the poor are exacted by the elite to prop up generations of bad policy. Under the USD fiat regime you don’t get a vote on the important issues.
The paradigm is shifting, don’t miss it.
Book of the Month:
-“The seemingly random events of Brexit, Trump, and a rise in populism and hate in our world are not haphazard or isolated at all. They are all connected to a loss in hope for a better future for large portions of the population. Underlying this loss of hope is a new economic reality where it’s not just the poor who are missing out on economic gains. Much of the middle class is also feeling squeezed. Instead of technology allowing for a fifteen-hour work week, as Keynes predicted when he penned his 1930s essay “Economic Possibilities for Our Grandchildren,” vast numbers of people are working longer, in jobs they rightly fear will soon be gone. Trapped—wondering how they will provide for their families and basic needs when the other shoe drops. At the same time, we are seeing a massive rise in inequality: in the United States, the top 5 percent of the population now holds more than two-thirds of the wealth, while the remaining 95 percent of the population fights for their share of the other third.1 Just three people—Jeff Bezos, Bill Gates, and Warren Buffett—account for more wealth than 50 percent of the population.”
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