A key justification of the Fed — of Keynesian central banking — is that the way to make an economy grow is to print money. This is the "Philips Curve" -- a tool that claims a trade-off between unemployment and inflation. In that model, if you want economic growth, you print more money. If you printed too much and got inflation, you just print less. Typically by raising interest rates so banks create fewer loans.
The political class extorts and robs the common man just as the aristocracy extorted and robbed the peasants centuries ago. Nothing has changed except the optics.
Technology changes, people don't. Anyone who doubts this should read "The Twelve Caesars" by Suetonius.
Given that at this point the political price to pay for kicking the money printer economy is utterly untenable, and that, therefor, the snowball is only just getting started for real, it's going to get a hell of a lot worse, for a long, long time.
This is not being defeatist, I argue. Anything else is illusion.
So the only practical question is what must the man on the street do?
Us rubes in third world countries are well used to this scam, where the government taxes all of our currency denominated assets at the rate of 7 to 10% every year. Our only haven is hard assets, preferably ones that are untaxed. You then lose a significant amount in arbitrage whenever you need to make those assets fungible, but that is much less than inflation (usually). You also lose liquidity, so you must at all costs avoid over leverage.
It makes for a far less efficient economy, of course.
I'm so fed-up with (pardon the pun) all of them but my first thought after reading this: Wasn't Trump a businessman? Didn't he know about this stuff? The CARES Act was a gigantic money printing operation that set off the tailspin we are in. Oh, to be a fly on the wall of that meeting with all the money grabbers drooling over the spoils. That they could talk Trump into passing this bill shows just how stupid he was or just how clever they were to convince him.
"Of course, for non-Keynesian economists — Austrians and free marketers — it’s a lot simpler: money-printing is counterfeiting. And, like all counterfeiting, it steals from everybody else’s dollar, pouring water into the wine of their life savings."
I think I'm difficult to categorise, but definitely non-Keynesian. I like that the Austrian school recognises that TANSTAAFL. But to me, money printing isn't necessarily counterfeiting. If I have a huge stack of gold coins, and I spend them all at once, it's likely to push the prices of everything up in the short term, at least until sellers respond to the price signal and start bringing more products to market. But I don't think that counts as stealing from the value of everyone else's gold coins.
If instead of buying with my gold coins, I write IOUs for gold coins and spend those, then as long as I don't write more IOUs than I can actually settle, nobody's harmed by my action - at least no more than if I spent the gold coins directly.
Generalising to banks, if they write IOUs to borrowers (which is what new money is), then as long as they remain solvent, the only "stealing" from others is the same kind as in the gold coin examples: a temporary demand increase pushing up prices. Borrowers who spent what they borrowed have to repay their loans, so they need to obtain money, which they do by selling something in the market, bringing back balance and undoing the temporary price increase. I'm convinced it's only when people, or institutions (esp. banks and govt), become insolvent, and especially if they aren't forced through bankruptcy, that inflation gets embedded into the economy.
"it’s confusing activity and wealth"
Yes! This is why the Keynesians get the broken window fallacy so wrong, along the lines of: "It's actually good that the baker's window has been destroyed, because now the baker and the glazier can swap some money for a window"??!
Try asking them how breaking a *glazier's* window is "good for the economy". Or breaking a baker's window and also throwing a glazier's cake in the bin.
Does anyone know how to obtain a transcript of Peters weekly podcasts? I love the podcast but would really like to read his commentary each week. Thanks for any insight.
That Cantillionaire sure looks like Larry Fink. First thing I’d do as president would be nationalise Blackrock et al - return the assets to those from whom they were stolen. The American (and other) people.