November 7, 2022
A few billion here, a few billion there – and suddenly we are looking at real money. Even more important, real inflation.
Governments all over have been spending like drunken sailors in a desperate attempt to counteract the ruinous effects of the Covid pandemic and resulting closures.
We have seen panic spending accelerate as governments threw away all sensible financial guidelines after unemployment rose sharply and banks took fear. Markets swooned and financial markets issued storm warnings.
Everyone remembered 2009 when ATM’s began to run out of money. Panic was in the air. And all this in a mid-term election year where the Democrats appear to be trailing significantly. Lurking not so far off is a giant storm cloud belching fire and smoke named Donald Trump and his legions of hillbilly Republicans, Christian evangelists and suburban gun owners.
Economists assured TV viewers that the sharp inflation being experienced by Americans was due to various sorts of arcane mumbo jumbo, wicked Red Chinese, menacing Muscovites, and even labor or supply chain shortages.
But the real culprit – certainly in the case of the US – is the federal government in Washington sitting atop a monster $30.5 trillion national debt that keeps growing larger and larger. Economists have previously assured us that our ability to print unlimited quantiles, and the world’s willingness to accept this fiat money, meant that our huge deficits and run amok borrowing did not really matter.
But they do. In my native New York City, I went for my usual breakfast of eggs, turkey bacon and a toasted bialy (a sort of Jewish English muffin). It cost $19.10. The next morning, I had the identical breakfast – and then it cost $21.10. That’s inflation – which Hermann Goering rightly observes can bring down governments faster than revolutions.
Governments create inflation and benefit from it. Inflation is a form of taxation that increases their revenue and lowers their debts (they pay back borrowing in depreciated currency). They get more from taxes.
Republicans used to keep the lid on inflation until Donald Trump came along. He blew the lid off and appeared heedless of the dangers of overspending. Farmers, a party bedrock, got huge subsidies and grants.
The Democrats have always been the party of overspending. Many Democratic voters don’t even pay taxes. Many others receive subsidized food, rents, education and health care.
Forty percent of Americans pay no income tax, meaning that sixty percent must support them. America has ended up, like France, with a permanent underclass that lives off the fat of the land. France was crippled by having to support a large, non-productive class that always threatened to explode into violence.
In a similar sense, America’s big cities have also fallen prey to a permanent welfare class that holds the urban areas hostage. I vividly recall the New York City power failure of 1977. Soon after the lights went out all over town, mobs of looters poured into the dark streets, smashing, stealing or burning. It was the heart of darkness.
My father, a Manhattan liberal, told me, ‘if we don’t keep giving them money, they will come and burn down our part of town.’
Trump supporters claim the last presidential election was stolen. This is not the case. But their claim of theft is really code for the mobilization of black voters that propelled Biden into the presidency. Without the big turnout of black urban voters in big cities, Trump would have won. But neither he nor his supporters dare assert that they mean black voters. Any more than Democrats dare claim that extreme Christian right-wingers form Trump’s base.
Interestingly, all the banners seen during the mob attack on the US Congress hailing Trump and Jesus have been scrubbed from TV news reports.
Recall the warning, ‘When fascism comes to America, it won’t be wearing jackboots. It will be wrapped in the stars and stripes and carrying a Bible.'” Attributed to author Sinclair Lewis.
I went to school with the son of Charles Lindbergh, a leader of the US anti-war right. His memory still quietly inspires some Americans, particularly in the Midwest, South and Western states. History could be coming full circle.
Copyright Eric S. Margolis
This post is in: USA
Oh for an honest days work for an honest days pay.
So..in your mind..blood on the streets of your beloved New York city would have been preferable to the corporate greed money grab that is the current bugaboo inflation crisis?
Like so many, you’ve fallen for the ‘ western governments have printed too much money ‘ shell game. Yes..those pandemic cheques probably contributed a little. But what about big corporations who are beholden to the shareholder ( re: the Warren Buffett’s) who are under pressure to recoup pandemic losses.
Or the corporation’s who have little or no ties to Chinese imports who have seized upon the opportunity to blame ‘ supply chain issues ‘ as a reason to raise prices.
..the cost of gasoline and diesel has dropped significantly… without a correspondingly drop in retail prices.
You are an American so I doubt this was on your radar because it wouldn’t have sold a single book…in 2003 BSE devastated the beef cattle industry in western Canada. Producers couldn’t give their animals away…yet the price of beef at the supermarket barely reflected that…
Have dogs out for a walk… using spare leases
Now that Democrats are (rightly) exposing the evangelical nutcases that form much of Trump’s base. Many are exposing themselves by whining about Trump’s misuse of them.
It is important to differentiate between the sources of inflation. The Fed increased the money supply from $1 trillion in early 2000s to $8 trillion now.
Most of that went into stock and housing inflation effectively taxing middle and lower incomes in a wealth transfer to the rich.
Then there is the real cost increases such as for resource depletion and also the supply chain screw ups which do increase costs.
Instead of just pumping oil out of large pool underground we get an increasing amount of our supply from sucking oil from between rocks we’ve fractured and from boiling the oil out of saturated sand.
Oil is a proxy for all resources as we deplete the richness of our planet.
Money printing, no matter done by government or banks is inflationary but the real trend which has to be carefully tracked is the decline in our standard of living due to depletion.
I always thought about left and right as the opposing sides of a circle, not the opposite ends of a continuum. That is what I take from your observation (above). Move far enough towards either side of the circle and you come together on the backside. Everyone claims to be righteous. There is “left”, there is “right” and then those who are on another channel altogether; who can’t find a home in either tribe. A friend, Dr. Asaf Durakovic (may he rest in peace) often said: “When God want’s to punish a people, He first takes away their reason”.
I think the Americans are at a real serious crossroad. I suspect the upcoming mid-terms are going to be disasterous for their country.