Let them eat dirt
by Mark Luedtke
The USDA also blames storms, among other factors, for food price inflation. Storms are often blamed for energy price inflation, too, but I don’t remember any storm that could have caused energy prices to jump 19 percent in July. Charts showing median income and prices for milk, bread, new homes, new cars, gasoline, stamps and movies all show the same exponential increase over time. As Milton Friedman taught, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money, than in output.” In other words, all price inflation in the U.S. is caused by the Federal Reserve (Fed) – history’s most successful counterfeiting organization.
The crash of 2008, like the dot-com bubble before it, was caused by former Fed chief Alan Greenspan printing money for 20 years. As Austrian Business Cycle Theory explains, the damage to the economy occurs during the illusory boom created by printing money. During this time printing money artificially lowers interest rates, misleading entrepreneurs into making malinvestments – investments that appear profitable given the artificially low interest rates but which can’t be profitable under natural interest rates. The bust, painful though it is, is the correction. During the bust, people heal the economy by wiping out the malinvestments and reclaiming resources that haven’t been destroyed and allocating them to profitable enterprises. The Fed triggers the bust by reducing money printing to reduce inflation, causing interest rates to rise.
Current Fed chief Ben Bernanke did not allow the 2008 crash to wipe out Greenspan’s malinvestments. Instead, his printing dwarfed Greenspan’s. He’s still printing $85 billion a month. He locked interest rates at zero. As a result, Bernanke created a bubble that dwarfs Greenspan’s bubble, and it will soon pop.
You might wonder where the price inflation is since the Consumer Price Index (CPI) is low. One way our rulers hide inflation is by reducing product size. If you look at your formerly six-ounce can of tuna, you’ll see it’s now only five ounces, one of which is liquid.
They also corrupt CPI. Economist John Williams of Shadowstats.com explained the substitution method: “The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living.” When the Fed makes hamburger too expensive to eat, they’ll substitute the price of dirt for hamburger.
Unlike Marie Antoinette, our rulers know they’re impoverishing us to the point of starvation. They steal our wealth by legally counterfeiting money during the boom. Nobody realizes they’ve been robbed until the bust. Then our rulers blame capitalism and start a new cycle. It’s genius.
Early in the year, I predicted the Fed would no longer be able to hide price inflation by the end of the year. Sure enough, general price inflation prompted the Fed to warn it would slow printing by the end of the year. Just talking about that sent markets into a tailspin. Furthermore, price volatility illustrates government has broken our markets. Our rulers know the crash is coming. Following the bi-partisan, socialist script, President Obama is laying the groundwork to blame Wall Street.
Because the dollar is the world’s reserve currency, a World War II relic from when the dollar was advertised to be as good as gold, this collapse will be global. Economist Joseph Salerno reported it may already have begun: “In recent days, nervous investors have begun to pull funds out of developing Asian economies in anticipation, jolting stock and currency markets in India, Indonesia and Thailand. In the past few months, the Turkish lira has depreciated by 4.5 percent against the dollar, while its dollar-denominated debt stands at $172 billion or 22 percent of its GDP. Goldman Sachs forecasts a further 15 percent fall in the Turkish lira, spurring a financial crisis as it becomes more and more expensive to buy dollars to service these loans, most of which are short term. Other previously fast-growing economies with large accumulations of dollar-denominated debt such as Brazil, India and South Korea are also struggling right now and will likely be caught up in the impending financial crisis.”
Rising treasury yields and other signs also indicate a crash is imminent. The $64 trillion question is whether Bernanke will print less as promised and trigger the bust, or will he cave to political pressure to print even more and cause hyper-inflation. Either way, it’s going to hurt.
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 only.