Conspiracy Theorist: 1/12

Price inflation, crash or both

Mark Luedtke

By all measures the world economy is grinding to a halt, and while government’s propagandists claim the US economy is growing, indicators say otherwise. David Stockman reports, “With each passing day the evidence [the US economy is slowing] mounts, and this morning’s trade data was a doozy. During November exports shrank by 2 percent and are now down 12 percent from the peak, and at the lowest level since March 2010.” Exports are a leading indicator of the economy.

Economist Frank Shostak adds, “The yearly growth rate of production fell to minus 1.2 percent in November versus 4.5 percent in November last year. According to our model the yearly growth rate could fall to minus 3.4 percent by August.”

Given these scary economic indicators, it might seem odd the Federal Reserve (Fed) raised interest rates above zero for the first time in seven years a few weeks ago, but when you look deeper, it’s not so surprising. Shostak informs, “‘The Committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident the inflation will rise over the medium term to its 2 percent objective,’ the Fed said in its policy statement.”

After seven years of unprecedented inflating of the money supply with its zero interest rate policy (ZIRP), the Fed finally fears serious price inflation.

It’s not like price inflation has really been low. In an op-ed for Business Insider, Presidential candidate Rand Paul reminds us what anybody who pays bills knows. “Over the past 15 years, the price of white bread has increased by over 50 percent, while the price of eggs has more than doubled,” he wrote. “As a more conservative-sounding Texas senator pointed out in the October GOP debate, the cost of ground beef and electricity have also appreciated significantly, by 115 percent and 60 percent, respectively.” The only saving grace in the Fed’s corrupt calculation of inflation is gas prices have plummeted. While good for consumers, the lowest oil price in seven years is an indicator of a bad world economy. By the Fed’s usual logic, low oil prices mean the Fed shouldn’t raise rates.

This indicates Fed ministers are terrified of price inflation. The Dayton Daily News inadvertently explains why: “‘I think the tide is now turning to job seekers,’ said George Mokrzan, director of economics for Columbus-based Huntington Bancshares Inc. ‘I think these unemployment rates have dropped to such a low level, businesses are going to start having a hard time finding the qualified workers that they need,’” the DDN reported. “‘Consumers are going to feel better in terms of job opportunities. There’s going to be some upward pressure in wages,’ he said.”

In other words, after seven years of ZIRP, the funny-money the Fed printed, which only lined the pockets of politicians, plutocrats, bankers and ultra-rich so far, finally trickled down to serfs.

Superficially, this may seem like a good thing, but Paul explains, “The reason for this is because the newly-created money is disproportionately finding its way into the hands of those in the highest income bracket. From 2009 to 2012, as the money stock increased by over 2 billion, the real incomes of the top 1 percent jumped by more than 30 percent.”

That’s good for them, but because the Fed’s funny-money has finally trickled down to serfs, price inflation will skyrocket as masses of people with more money bid up the price on the same goods. This pernicious quality of inflation, why rulers love it as a tool, fools people into thinking they’re getting richer, but in reality they’re getting poorer. Only rulers benefit because they get the money first while prices are still low. This scam perpetrated by governments’ central banks, counterfeiting operations all, steals our wealth.

The Fed is trapped, and it’s trapped us all with it. If it keeps rates low, price inflation will race out of control. If it raises rates, the unprecedented bubbles it created over the past seven years will pop, crashing the phony economy and exposing central banking as a fraud. One or the other, or both, are going to happen. The laws of economics, like other laws of nature, cannot be denied. Whichever happens, people will lose jobs, homes and businesses, and rulers will end up owning them. Government is transforming what was the greatest free enterprise system in history into modern feudalism where wealth is concentrated into the hands of a few.

The views and opinions expressed in Conspiracy Theorist are the views and/or opinions of the author and do not reflect the views and/or opinions of the Dayton City Paper or Dayton City Media and are published strictly for entertainment purposes.

Mark Luedtke is an electrical engineer with a degree from the University of Cincinnati and currently works for a Dayton attorney. He can be reached at MarkLuedtke@DaytonCityPaper.com.

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Reach DCP freelance writer Mark Luedtke at MarkLuedtke@DaytonCityPaper.com.

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