I’ve seen reports of rising prices and reduced availability of all sorts of items, and the interpretation I’ve been hearing is that it’s due to inflation caused by rampant money printing.
I don’t agree with this assessment, because in order to have inflation, you would need to have printed money distributed as salaries or stimulus, to which the sellers would react by raising the prices to compensate for the dilution of the value of money. So far, I’ve actually seen inflation but it’s been contained to the very select few asset categories, because the banking system is designed to prevent people who actually need money to get it, because they are deemed “high risk”, and the entire banking system is designed around the various safeguards that essentially guarantee that all the cheap credit will be available only to the select few “blue chip” players, and they are the ones who are swimming in all this low-interest credit, supposedly created to boost the economy. What this means is that the necessary prerequisite of inflation – the increased volume and speed of circulation of money across the entire populace – does not exist. And yet, we do indeed have the opportunity to witness the increased retail prices and reduced availability of an increasing number of items. So, what’s going on?
I think what’s going on is actually worse than inflation – we’re seeing the collapse of the entire economic system, we’re seeing it contract into a black hole. The governments kept imposing various anti-capitalist rules, with all kinds of excuses – whether it’s sanctions, or fighting carbon, or fighting covid, but what they managed to do is disrupt the routine of supply and demand to the point where production became more expensive, transport became more expensive, and we now have spikes in demand that result in higher orders from the manufacturers, which raises the prices because the production just isn’t scaled for such spikes, and then those spikes clog up the transport lines, creating random and chaotic delays across the board, which then in turn creates shortages due to time delay between order and delivery, which in turn raises the retail prices. Also, there are serious labour issues due to lockdowns, among other things.
So, the entire supply-demand that usually follows predictable principles is now aggravated by the length of the global supply lines and the resulting delays, and the entire thing is magnified by the fact that all kinds of communists in power are competing with each other in introducing more anty-capitalist, anti-energy, anti-efficiency laws, and the entire machine might actually grind to a halt, to their great pleasure, and our great misfortune. Basically, capitalism normally reacts to high demand by immediately delivering high supply of goods and services, which keeps the prices either constant or lower, and now the machine is disrupted to the point where it just can’t deliver, so the obvious thing in case of reduced supply is to raise the prices. Also, the cost of staying in business in the lockdown era has increased, and the businesses can either raise the prices or close.
So, as much new money gets printed, the only places that manifest inflation are the stock market and the real estate market, because that’s where the ones with access to all that credit get to spend it, which creates huge but localized bubbles. But if we’re talking about the prices of the retail goods and services, they have nothing to do with inflation; yet, becuse the governments will eventually find a way to pour money into the pockets of consumers in order to “stimulate” consumption, and then inflation will explode in the retail market as well.
What we are seeing is a result of a socialist conspiracy to sabotage capitalism.
Exactly. We are witnessing the effects of successful socialist attack on Western capitalism, all while the mainstream narrative is that capitalism doesn’t work, and the state should step in and redistribute wealth better, which is pure socialism. And then they do, and it makes things worse, because socialism is what caused the problem in the first place, and more socialism just aggravates it. But since the narrative is inverted, when state intervention inevitably doesn’t make things better, all the socialists immediately start parroting that the things got worse because the state didn’t intervene enough. That’s the cycle we’re in.
The issue with “inflation” narrative is that it’s become completely meaningless, similar to climate change narrative, due to extremely bad signal/noise ratio. Everybody has opinion about it, and most of those opinions are completely wrong even on a very shallow level. You can probably count people who really understand parts of what’s going on with economy on the fingers on one hand, and even they have serious issues understanding all the implications, because it’s all interconnected in extremely complex ways.
For example, there’s a global consensus that central banks are printing money like crazy. But the truth is that even though central banks do set the stage for printing money, the point when money actually does get printed, when some balance sheet actually expands instead of just being shuffled around, is only when a person takes out a loan. And that’s not happening, not really. Most people can’t afford to borrow, and if they must because they can’t avoid it, they can’t get it because they are not eligible. From all that I’ve seen (and I certainly don’t have a complete picture), monetary policy is actually failing to print money right now. And it’s not just monetary side, there’s no help coming from fiscal side either. Stimulus checks should have increased monetary supply and kickstarted the economy, but people are actually taking their stimulus checks and repaying loans (or buying crypto or ETFs). That’s not inflationary, that’s deflationary, it removes money from economy, and exactly the opposite of what government wanted, because socialist ideas never work as intended.
The discussions about inflation/deflation completely miss the point. Yes, lumber prices temporarily spiked and then cratered, because coronavirus exacerbated issues the sector had over the past few years, and that kind of looks like inflation. Energy prices cratered last year and now they are soaring, both because of the shutdowns, but that’s not really steady inflation, or steady deflation. You can’t just lump all those wildly opposing price movements and get a number, and it that number is positive, conclude that we have inflation, or that we have deflation if the number is negative. CPI was actually negative across the board, except energy which pulled the average to the black, and the idiots concluded that’s inflation. I think even real estate was negative on average, because it’s rising only in a few select cities like SanFran.
I think you’re onto something – it’s a failure of the financial system, because on one hand, you have technology which is exponential deflationary force, and on the other hand you have central bank system which bases money on debt, and needs steady inflation to function. Debt-based monetary system is deadly in deflationary economy, because you can never repay your debt, and things start to break. The way it is set up, even in inflationary economy you probably couldn’t repay it, but you could kick a can down the road, and everybody hoped they could do it forever, because debt doesn’t matter if you can always take out more debt to repay debt.
That debt-based system is increasingly losing the battle with technology. Technology makes stuff exponentially cheaper and more productive, and the only reason we’re still working 5 or 6 days a week instead of 2 days a week is artificial inflation created by governments. Exponential part of it is the tricky and deadly trap. One day you have money based on debt and everything is fine, the next day you have a bit of deflation but you can handle it with artificial inflation, the next day you have serious issues, and the day after you’re no more, because your issue doubled in size every day. Show me the state that doesn’t have any debt, and I’ll show you the state that will maybe survive. Maybe Russia, because the US flexed their power over them and isolated them from the global economy that is now failing, and did them a favor.
This new religion seems to be new kind of Islam with it’s agressive zero covid, zero carbon, zero this, zero that kind of policies … especially with this zero carbon bullshit. Are they trying to abolish all organic life and put it on the silicon in digital form?
I don’t think there’s any goal, just hysteric schadenfreude and self-hatred. They are like Joker: set the world on fire and laugh hysterically.