Don’t Hold Your Breath!
“One of the things that surprises citizens in Argentina or Turkey is that their populist governments always talk about the middle classes and helping the poor, yet inflation still soars, making everyone poorer.”-Daniel Lacalle
So, if you are waiting for the government to stop inflating, you would be wise to park your money in gold and silver while you wait!
After all, if you had a money printing press and could print all you want without legal consequences, would you stop?
That’s why at one level or another inflation persists under the president of both parties, during Congresses dominated by Republicans and Democrats alike. They can get away with it, even though it is one of the great flimflams of all time. They get away with it. That’s why Federal Reserve chairman like Alan Greenspan and Ben Bernanke are appointed and reappointed by presidents of both parties. Greenspan was originally appointed by Reagan, reappointed by first Clinton, and then again by W. Bush. Bernanke was appointed first by W, then reappointed by Obama.
Jerome Powell was appointed by Trump. He had the support of Biden and most Democrats until recently; the oddsmakers thought he would be reappointed at first, but his cluelessness makes him a perfect fall guy for the administration to blame for our rising inflation and other economic difficulties. That plus the scent of Fed insiders trading fast and loose may even attach to Powell.
But the point is that Washington and the Deep State always have one of their guys in charge of money printing. That money funds political promises to get office holders reelected. It funds elective wars. (And they are elective wars; if they were existential wars, we would not have risked leaving unknown billions of dollars of military hardware behind in Afghanistan!) And it is the way $30 trillion dollars in unpayable US debt will be devalued over time – ruining what’s left of the dollar and your dollar savings along the way.
And that is why “no government looking to massively expand its size in the economy and monetize a soaring deficit is going to act against rising prices, despite claiming the opposite,” says Daniel Lacalle.
In a new piece for the free-market Mises Institute, Governments Love Inflation, and They Won’t Do Anything to Stop It, Lacalle writes,
Inflation does not happen the next day you print money. It is a slow process of gradual erosion of the purchasing power of the currency that started years ago and culminated with the insane decision to implement monster demand-side policies (huge government spending and money printing) in the middle of a lockdown.
But why do governments ignore it? Why do they not act? Surely it is in their best interest to keep prices low and consumers—voters—happy. The answer is simple: because governments are the biggest beneficiaries of inflation. They collect more receipts from indirect taxes and their soaring debt is slowly eroded by inflation.
Furthermore, governments never act against inflation, because they benefit from it and, more importantly, can blame it on everyone except their policies. Even in Argentina, where inflation is higher than 50 percent and ten times higher than in neighboring countries, citizens are slowly convinced that there must be other causes than money printing. Even when presented with the evidence of a central bank that has raised money supply more than 120 percent in two years with diminishing demand, the press and politicians blame inflation on “multicause” effects.
So, the media can cover for the Deep State Money Manipulators. But it can’t very well hide the rising cost of living you see all around today. Just remember those rising prices are simply the value of the dollar eroding away.
And while it erodes, be sure to have your money parked in gold and silver. Because they don’t erode.