Wednesday, August 14, 2013
Wednesday, August 14, 2013 2 comments
We're still getting cries from the Rightwing business pundits that hyper-inflation is just around the corner, or better yet that it's already happening. This would mean that the government numbers on inflation are lies, all lies (lies, lies, I tell you, sputter, sputter, drool). How many years do they think they can keep saying this without anybody catching on? For the brain dead right, the answer is, forever. Most people are starting to grasp that it's nothing but 'Horse Feathers' (uncensored internet radio, pleazzzee).
The proof that the 'untethered' right has been using throughout Obama's two terms has been that gold's steadily increasing price 'proves' inflation has been happening at a horrific pace. They've kept saying this even as gold prices have been falling by a third. (oops) Now they're claiming that 'real' gold, that is physical gold that you buy at the pawn shop hasn't gone down, and is in short supply. Except that it has gone down, the market is the market.
Oil is supposed to be the other harbinger of hyper-inflation, except that hasn't been going up either. Sure Bush taking Saddam's massive oil production off the market did drive the price of oil from $18/barrel (& falling) to $140/barrel until it collapsed the banking system, but that increase has been incorporated into the price of everything like you would expect, and it has stabilized.
What is Hyper-Inflation really? It is the printing of massive amounts of money, and distributing it to people who will spend it to buy goods and services that are in short supply. This drives up prices in a fantastic way, but only if you keep printing money in ever increasing amounts. We don't have that problem. There is really downward pressure on wages that inhibits spending even if the workers have some money. We have far more goods than people can buy, you should expect prices to actually fall. When you start seeing empty shelves at Walmart then you can worry.
Most of the $85b per month in new money that the Federal Reserve (a private bank, if you didn't know that) is printing is going to people that already spend millions each month to maintain their 'way of life'. Buying a new, larger Italian yacht or a French helicopter isn't going to produce any inflation. Most likely the rich just launder their increased cash flow through a Cayman Islands account that is really held in New York so as to not pay any taxes, but not actually buy anything.
The real goal of the Fed is to convince the super rich that the Fed is printing sufficient money so that it will lead to inflation, and make their wealth decline in real terms. The idea being that the rich will need to actually 'make' some money, and they will be tempted to engage in some sort of real commerce that will inadvertently do us 'little people' some good. There have been some minor signs of this increased commerce, primarily in the easing of mortgage requirements so that a few more people can buy homes.
In short, you can forget about buying a wheelbarrow for your loaf of bread money, but stealing a shopping cart to transport your hoard of canned goods while you still have some money, that might be prudent. Deflation is still the real fear, this is what has always defined a Depression, and we're still in one for the foreseeable future. Why? Because billionaires flush with cash love a good bout of deflation so as to buy up your assets for 10 cents on the dollar, and they still hold sway.
Most of the really vast fortunes that old white men are sitting on today came from their daddies taking advantage of the last massive deflation in 1930. In short, we stand on the precipice, we can control our future, but only if a significant fraction of the people come to understand all of the things the rich don't want you to know anything about.
Twitter @BruceEnberg Twitter isn't affected by deflation, at least until the canned goods run out....
remember the Census