Inflation is Just Going to Keep Getting Worse and Worse and Worse – No Way Out

Andrew Anglin December 9, 2022

We’ve said from the beginning: the inflation has no bottom, and the best thing the government can do is manage this “default by inflation” thing as responsibly as possible.

There is no way to stop it at this point without completely destroying the world economy. Allowing it to happen would be much, much less destructive than interfering.

People think they’re smarter, and act like this is the 1980s, and you can just raise interest rates to draw down inflation. But things are way too far gone. Raising interest rates just deflates the value of assets during an inflation crisis, which makes a double whammy, and does NOT do anything to stop inflation.

You learned things in school about the basics of economics. I get that. But those basics no longer apply.

Reuters:

Globally, people are experiencing inflation at levels not seen for decades as prices surge for essentials like food, heating, transport and accommodation. And though a peak could be in sight, the effects may yet get worse.

How did we get here? In two words: pandemic and war.

A long and comfortable period of scant inflation and low interest rates ended abruptly after COVID-19 struck, as governments and central banks kept locked-down businesses and households afloat with trillions of dollars of support.

That lifeline kept workers from joining dole queues, businesses from going broke and house prices from crashing. But it also knocked supply and demand out of kilter as never before.

By 2021, as lockdowns ended and the global economy grew at its fastest post-recession pace in 80 years, all that stimulus money overwhelmed the world’s trading system.

Factories that had been idled could not ratchet up fast enough to meet demand, COVID-safe rules caused labour shortages in retail, transport and healthcare, and the recovery boom caused a spike in energy prices.

If that wasn’t enough, Russia invaded Ukraine in February and Western sanctions on the major oil and gas exporter sent fuel prices yet higher.

Known as a “tax on the poor” because it hits those on low incomes the hardest, double-digit inflation has exacerbated inequalities worldwide. While wealthier consumers can rely on savings built up during pandemic lockdowns, others struggle to make ends meet and a growing number rely on food banks.

With winter setting in across the northern hemisphere, that squeeze on living costs will tighten as fuel bills soar. Workers have taken strike action in sectors from healthcare to aviation to demand that wages keep pace with inflation. In most cases, they are having to settle for less.

The problem here is: the US government does not want to solve any of these problems. There is a way to peacefully allow massive inflation. There are many countries in the world, particularly those that have gone through communism, where the denomination on small bills is in the hundreds, thousands, or even millions.

These countries went through periods of inflation or even hyperinflation and then managed to right the ship and get everything back on track. In Vietnam, $50 is equal to over a million dong, but the currency is currently very stable.

If the US came to a place where a $100 bill was the new $1 bill, that would not necessarily collapse the economy completely. It would let all of the rich people who are holding huge amounts of debt off the hook, and it would create hard times for the middle class, but it would not lead to global collapse, necessarily.

The US government is purposefully pushing for global collapse, in particular because they think it will harm China more than it will harm them. I don’t think this is correct, and it actually seems very insane. But I don’t think we can draw any other conclusions from what we see these people doing.

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