Friday, January 21, 2022

"Since January 2020, the United States has printed nearly 80% of all US dollars in existence." Be afraid. Be very afraid.

 

If this report doesn't scare the hell out of you, you sure as heck don't understand the economic disaster now staring us in the face.


Since March of 2020, Americans and the world alike have watched from the sidelines as power hungry politicians have ushered in draconian lockdowns, shutdowns, police state measures, and brought the economy to its knees. While governments around the planet used their central banks to devalue their currencies by printing money to fund their tyranny, the US led the way down this road to fiscal horror.

Thanks to the trillions of dollars the Federal Reserve has printed over the last two years, America is currently in an inflation crisis. One need only look at the price of groceries over the last two years to realize just how bad of a crisis we are currently experiencing.

. . .

As government spending has skyrocketed over the last two years, they have financed their massive expenditures by stealing value from your savings by printing more money through the central bank.

When you print more money it means there are more dollars chasing the same amount of goods and services, which causes prices to rise. In just the past three fiscal years, federal spending has swollen to nearly $7 trillion a year, up from about $4.4 trillion in fiscal year 2019. Spending was $6.6 trillion in 2020, and $6.8 trillion in 2021.

If we want to put this into perspective, we can take a look at the monetary supply at the beginning of 2020, which showed just $4.0192 trillion in circulation. By January 2021, that number had jumped up to $6.7 trillion — but this was only the beginning.

By November of last year, that number climbed to $20.354 trillion dollars in circulation — meaning that since January 2020, the United States has printed nearly 80% of all US dollars in existence

As the Hill points out, “the Biden administration and Democrat-controlled Congress are causing America to slowly but certainly commit economic suicide. The only hope the United States has to reverse course is a widespread, firm backlash against the irresponsible policies that created the present crisis in the first place. A good place to start would be a total rejection of the Build Back Better bill now under consideration in Congress.”

Unfortunately, that did not happen and the US is setting itself up for a situation similar to that of Germany’s Weimar Republic.


There's more at the link.

Forget the "official" figure of inflation at about 7%.  That's been bureaucratically mangled, folded, spindled and mutilated until it's meaningless.  It no longer measures reality for consumers "on the ground".  Applying the criteria I discussed last year, plus the corrective factor of 3.5 that I proposed, I firmly believe that our actual consumer inflation rate is more like 25% right now, and getting worse by the day.

The money supply figures explain why.  Crippling inflation, perhaps hyperinflation, is now unavoidable.  All that money is flooding the market, looking for something to buy - and in the process, driving up prices in all directions.  (If you don't understand how money supply drives inflation, see here for an excellent primer.)

Most of us don't have sufficient discretionary income to accommodate such price increases.  It's time to make a radical, wide-ranging analysis of our income and expenditure, and cut back on the latter wherever possible, concentrating on essentials and leaving out luxuries.  This is going to take years to sort out, and we should adjust our perspective accordingly.

Peter


14 comments:

  1. Related to that first paragraph - California wants to usurp parents when it comes to the "vaccine":

    https://www.yahoo.com/news/california-kids-12-older-could-050023607.html

    St. Andreas needs to make another housecall.

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  2. This chart is misleading. The vertical jump in May 2020 is because the definition of M1 changed and added deposits in money market accounts in IRAs, basically because those are actually liquid these days. People write checks against them. So the FED redefined M1 to include them. Yes, the money supply still increased at an incredible pace, but not a vertical wall as is shown on the graph.

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  3. A formerly gold-backed dollar from 1932 is now worth 1.12¢.

    The Fed has inflated away (and stolen from everyone) 98.88% of the value of the money in circulation.

    And they still want 20-37% of the 1.1% left to you.

    This is why gasoline is pushing $5/gallon hereabouts, and beef and chicken are headed for $12/lb and up, with no end in sight.

    Brace for impact.

    The music's going to stop, and people without a chair are going to know hunger in this country like no one has known since the 1930s.

    War follows these things, inevitably.

    The last time, it was global, for seven years, with the fallout from the initial conflict lasting another 50 years.

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  4. It's not just the money supply - all that extra money is chasing a diminishing quantity of goods and services, as factories are shut down, transportation is disrupted, and workers (for one reason or another) leave the workforce.
    So instead of the money supply keeping up with wealth creation, we have more money and less wealth for it to represent.
    The classic mechanism of hyperinflation - involving foreign debt denominated in hard and/or foreign currency - doesn't apply here; that's the one thing Carboniferous Monetary Theory gets right. But, one way or another, the Gods of the Copybook Headings will once again make themselves known.

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    Replies
    1. This

      No imagine if the USD stops becoming the reserve currency. The weaponaztition of SWIFT and other idiotic moves have made this an inevitability. Honestly tye trade imbalance and the petrodollar are probably they only things keeping us from becoming Germany or Zimbabwe. A lot of this extra dollars are leaving.

      Inflation has been lied about since the 70s. I used to be able to go out get a burger and a beer for around $10. I haven't been able to do that for under $15 for a while. The only people who seem to making out in the last 40+ years are wall st, the politicians, and beurocrats.

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  5. The differential between what the government says the state of the economy and money is and what the average consumer actually sees on a day to day basis based on their purchases and needs for living is going to be tougher and tougher to rationalize for those individuals - not the government - that both have to live in that society while supporting those policies.

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  6. The ignorance of economics amongst the general population is astounding.

    The vote for people from an equally ignorant pool.

    Economics should be taught by non marxists at at least high school

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  7. I agree with Jeff McPhate that M1 funny money is misleading. The velocity of that M1 money is in the gutter showing that it's not changing hands. https://fred.stlouisfed.org/series/M1V

    IMHO, the money stock is more aligned with the inflation we actually see.
    https://fred.stlouisfed.org/series/MBCURRCIR
    https://fred.stlouisfed.org/series/BOGMBASE

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  8. Also, the middle class feels the most pain.
    https://fred.stlouisfed.org/series/WFRBSN40188

    The lower classes are getting handouts to keep them happy during this inflation.
    https://fred.stlouisfed.org/series/WFRBSB50215

    The wealthy get their corporate welfare.
    https://fred.stlouisfed.org/series/WFRBST01134

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  9. I'd add to McPhate and Brutus above: 1) Yes, the chart is misleading as the M1 definition has changed. 2) Yes, the FED has acted irresponsibly and we will all suffer. 3) I don't recall hearing Obama, Trump or Biden* criticize the FED's monetary policies once. 4) Obama, Trump and Biden* have spent recklessly (or tried) thus adding to the coming pain.

    This is what I'm doing: TradeTheRatio.com

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  10. It says something about the velocity of money, none basically that with this much money in circulation and a destroyed global supply chain that modest high commodity driven inflation isn't hyper inflation.

    The natural trend globally is always deflation in a healthy economy mainly from improved efficiency but also from low birth rates.

    However the money boys, the upper classes who live on Interest rather than productive activity can't stand that and they have destroyed stable currencies because of it.

    If we want a workable economy, getting back to neither a borrower nor a lender be and a gold/silver standard is essential. The upside of going hot I guess is you can cram that down if you win and if the globalist money boys give you too much trouble, give em some right back a hundred time s harder.

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  11. "... the upper classes who live on Interest rather than productive activity..."

    Um.

    With the Operation Print All The Money going on, there's no Interest to be had, unless you're in the business of making risky loans. Bonus: people who have money are seeing it lose value at a rate far greater than any interest they could get, other than on risky loans. (Fractional-reserve banking is another evil perpetrated against the value of cash in the bank.)
    If the money printing slowed down, interest rates would go up, owing to the need to borrow existing money instead of just tapping into the new-money stream. And if interest rates went up, the interest on the national debt would go up as bonds were refinanced (or as new bonds were issued), and the debt bomb would go off for real.
    The ones who benefit from the current inflationary policy are not those with cash, but those with connections - the various grifters who receive the funny money the Government is conjuring out of nowhere.

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  12. Agreed 80% number and chart are misleading. Scare journalism gets hits on both left and right.

    Yes inflation is bad. Yes the fed sucks. No it isnt weimer republic scary with a jump of several fold in circulating dollars.

    https://fredblog.stlouisfed.org/2021/05/savings-are-now-more-liquid-and-part-of-m1-money/

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  13. "Savings"?

    Which lose 25%/year, forever, henceforth?

    At losses like that, in 5 years, $100 in savings turns into $23. In 10 years, it's worth $5.63.

    Only an idiot is "saving" money.

    You're either buying tangible assets that hold value, or trying (good luck with that) to find something that inflates faster than the money does.

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