Wednesday 25th of May 2022

printing inflation...


What’s happening to inflation? We know, of course, what the current numbers say: Inflation is high right now, although not 1970s high. But is this a blip or the beginning of a longer-term problem? Economists are deeply divided. I’m basically for the former, on what has come to be known as Team Transitory, but I might be wrong — and the data are sufficiently ambiguous that both sides can claim that the evidence supports their take.


By Paul Krugman


Yet policymakers can’t just shrug their shoulders; they have to, um, make policy. So what should they do in the face of uncertainty? The answer, I’d argue, is to make decisions that won’t do too much damage if their preferred take on inflation is wrong.

In the current context this means that the Federal Reserve should ignore calls for a quick tightening of monetary policy.

Why is it so hard to make a call on inflation right now? Because the current economy, still very much shaped by the pandemic, is, to use the technical term, weird. In particular, the standard measures economists use to distinguish between temporary price blips and underlying inflation are telling different stories.


The traditional measure of underlying inflation is the rate of change in the “core” price index, which excludes volatile food and energy prices. But there are alternative measures, like the median (as opposed to average) change in prices, which excludes drastic price moves in any sector.

During the last economic crisis it didn’t matter much which measure you used. All of them had the same message: Don’t panic. For example, when headline inflation was running hot in the winter of 2010-11, leading Republicans berated Ben Bernanke, the Fed chair, for loosening credit, warning that easy money might “debase” the dollar. But measures of underlying inflation were low and stable:


(see graph)


So the Fed stayed the course, and it was right.

These days, however, the different measures are telling very different stories:


(see graph)


A few months ago core inflation was looking high, driven by things like used-car prices — which clearly don’t represent underlying inflation, but are still part of the standard measure — while median inflation was subdued. More recently, core has subsided, but median inflation — mainly reflecting shelter prices — has surged.

So how serious is the inflation problem? We can argue about that, but maybe the crucial point is that nobody is going to win that argument in time to give helpful guidance to policymakers. Sorry, but ranting on cable TV and tweeting in CAPITAL LETTERS aren’t going to settle this.


So what should guide policy? I’d suggest that we heed the advice of Oliver Cromwell: “I beseech you, in the bowels of Christ, think it possible you may be mistaken.” (OK, you can maybe skip the gastroenterology.)

Consider, as an example of what not to do, the fate of the Obama stimulus package that was enacted in 2009.

It’s now clear that while stimulus was necessary, the actual plan was much too small and short-lived (as some of us warned at the time). Why the undershoot?

Part of the answer is that the administration’s economic forecast was excessively optimistic, envisioning the kind of quick recovery that rarely happens in the aftermath of financial crises. But the larger problem was a failure to think through what would happen if the forecast was wrong.

If the stimulus had turned out to be too big, that wouldn’t have been a big problem: The Fed could have raised interest rates a bit to head off overheating. But if the stimulus proved too small, the Fed couldn’t cut rates because they were already zero. So then what?

memo from Larry Summers, Barack Obama’s top economist, suggested that the president could simply go back to Congress for more: “It is easier to add down the road to insufficient fiscal stimulus than to subtract from excessive fiscal stimulus.” But this was a wild misjudgment of the political landscape — again, something some of us warned at the time.

The point is that the Obama team messed up — not by making a bad forecast, but by failing to understand that the risks of going too small were much higher than the risks of going too big.


What does that say about our current situation? Fiscal policy is pretty much off the table: Whatever the fate of President Biden’s spending plans, they aren’t likely to have much impact on short-run economic developments. So the question is about Fed policy. Should the Fed raise interest rates soon, to head off inflation, or wait and see whether recent inflation proves transitory?

There are risks both ways. If the Fed waits, inflation might become embedded, and bringing it back down again could be painful — though doable. On the other hand, if the Fed raises rates to head off an inflation problem that proves exaggerated, it could damage the economic recovery in ways that are hard to reverse. (Interest rates are still very low, so there would be little room for cuts if the economy weakens.)

So wait-and-see looks like the prudent thing to do. I think current inflation is transitory, but I’m not sure. I am, however, confident that tightening monetary policy based on what we know now would be a big mistake, because the risks of moving too soon and moving too late are highly asymmetric.

In short, don’t just do something. Stand there — at least for now.


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a wounded predator...

The Western economic system is coming to an end


by Thierry Meyssan  

Producing is no longer enough to live on in the West, while China has become the "workshop of the world". Only those with capital make money, and lots of it. The system is about to collapse. Can the big capitalists still save their fortune together?


Already in the 18th century, British economists of the nascent capitalism were questioning the sustainability of this system around David Ricardo. What was initially very profitable would eventually become commonplace and no longer enrich its owner. Consumption could not eternally justify mass production. Later on, socialists, around Karl Marx [1], predicted the inevitable end of the capitalist system.

This system should have died in 1929, but to everyone’s surprise, it survived. We are approaching a similar moment: production no longer makes money, only finance does. All over the West, we see the standard of living of the mass of people falling, while the wealth of a few individuals is soaring. The system is once again threatening to collapse and never rise again. Can the super-capitalists still save their assets or will there be a random redistribution of wealth following a generalized clash?



When the 1929 crisis hit the United States, the entire Western elite was convinced that the goose that laid the golden eggs was dead; that a new system had to be found immediately, or else humanity would perish from hunger. It is particularly instructive to read the US and European press of the time to understand the anguish that gripped the West. Huge fortunes had disappeared in a day. Millions of workers were out of work and experiencing not only misery, but often starvation. The people revolted. The police fired live ammunition at the angry crowds. No one thought that capitalism could be amended and reborn. Two new models were proposed: Stalinism and fascism.

Contrary to the image we have a century later, at that time everyone was aware of the flaws in these ideologies, but the most important, vital problem was who would best be able to feed their population. There was no longer any right or left, just a general "sauve-qui-peut". Benito Mussolini, who had been the editor of Italy’s leading socialist newspaper before the First World War and then an agent of British MI5 during the war, became the leader of Fascism, then seen as the ideology that would give bread to the workers. Joseph Stalin, who had been a Bolshevik during the Russian revolution, liquidated almost all of his party’s delegates and renewed them to build the USSR, which was then seen as the embodiment of modernity.

Neither leader was able to bring his model to fruition: in the end, economists must always give way to the military. Arms always have the last word. So it was the Second World War, the victory of the USSR and the Anglo-Saxons on the one hand, the fall of fascism on the other. It so happened that only the United States was not devastated by the war and that President Franklin Roosevelt, by organising the banking sector, gave capitalism a second chance. The US rebuilt Europe without crushing the working class for fear that it would turn to the USSR.



However, when the USSR disappeared at the end of 1991, capitalism, deprived of a rival, found its old demons. Within a few years, the same causes caused the same effects, production began to decline in the US and jobs were relocated to China. The middle class began its slow decline. US capital owners felt threatened. They tried several approaches to save their country and maintain the system.

 The first was to transform the US economy into an arms exporter and to use the US armed forces to control the raw materials and energy sources of the non-globalised part of the planet used by the rest of the world. It was this project, the adaptation to ’financial capitalism’ (if this oxymoron makes sense), the Rumsfeld/Cebrowski doctrine [2], that led the US Deep State to organise the 9/11 attacks and the endless war in the wider Middle East. This episode gave capitalism a twenty-year respite, but the domestic consequences were disastrous for the middle classes.

 The second attempt was Donald Trump’s curbing of international trade and return to US production. But he had declared war on the men of 9/11 and no one would let him try to save the US.

 A third development was considered. It would have involved ditching the Western populations and moving the few multi-billionaires to a robotic state from where they could fearlessly direct their investments. This is the Neom project that Prince Mohamed bin Salmane began building in the Saudi desert with the blessing of Nato. After a period of intense activity, the work has now stalled.

 Donald Rumsfeld’s former team (including Dr Richard Hatchett [3] and Dr Anthony Fauci [4]) decided to launch a fourth option during the Covid-19 pandemic. The idea is to continue and generalise in the developed states what was initiated in 2001. The massive containment of healthy populations has pushed states into debt. The use of teleworking has prepared the relocation of tens of millions of jobs. The health pass has legalised a society of mass surveillance.



It is in this context that the president of the Davos Forum, Klaus Schwab, published Covid-19: The Great Reset. It is not a programme, but an analysis of the situation and a forecast of possible developments. This book was written for the members of the Forum and gives an idea of their lamentable intellectual level. The author uses clichés, quoting great authors and the abracadabratic figures of Neil Ferguson (Imperial College) [5].

In the 1970s and 1980s, Klaus Schwab was one of the directors of Escher-Wyss (absorbed by Sulzer AG), which played an important role in apartheid South Africa’s atomic research programme, a contribution that took place in violation of UN Security Council Resolution 418. So he has no morals and is afraid of nothing. Later he created a circle of business leaders which became the World Economic Forum. This name change was done with the help of the Center for International Private Enterprise (CIPE); the business arm of the National Endowment for Democracy (NED/CIA). This is why he was registered in 2016 with the Bilderberg Group (Nato’s influence body) as an international civil servant, which he was never officially.

In his book, Klaus Schwab prepares his audience for an Orwellian society. He envisages anything and everything up to the death of 40% of the world’s population by Covid-19. He proposes nothing concrete and does not seem to prefer any option. We just understand that he and his audience will not decide anything, but they are willing to accept anything to keep their privileges.


We are clearly on the threshold of a huge upheaval that will sweep away all Western institutions. This cataclysm could be avoided in a simple way, by changing the balance of remuneration between labour and capital. This solution is unlikely, however, because it would mean the end of super fortunes.

With these facts in mind, the West-East rivalry is only superficial. Not only because Asians do not think in terms of competition, but mainly because they see the West dying.

This is why Russia and China are slowly building their world, with no hope of integrating the West, which they see as a wounded predator. They do not want to confront it, but to reassure it, to give it palliative care and to accompany it without forcing it to commit suicide.


Thierry Meyssan


Roger Lagassé



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FREE JULIAN ASSANGE NOW !!!!!!!!!!!!!!!!!!

ballooning inflation...

Thomas J. Penn is a US citizen and has lived in Germany for many years. He was a non-commissioned infantry officer in the US Army. He studied finance and management and has extensive experience in the financial markets. You can follow him on Twitter and Telegram at @ThomasJPenn.


Thomas J. Penn writes: Western politicians and central bankers are quick to offer explanations for rapidly rising prices – from bottlenecks in supply chains to their favorite bogeyman, Vladimir Putin. They don't dare mention the real cause: themselves.

 “Inflation is always and everywhere a purely monetary phenomenon” – Milton Friedman.

Prices in Western economies continue to skyrocket – whether in real estate, stock markets, cryptocurrencies, food, consumer goods, or energy. We are consistently seeing massive price increases that far outpace wage growth. In recent months, the situation has been getting increasingly worse, and we have heard nothing but excuses from the political establishment: from bottlenecks in supply chains to allegations that Russian President Vladimir Putin is personally manipulating the supply of natural gas. Of course, the Western establishment would never consider putting the blame where it belongs – on itself.

Although many in the financial industry and in business and politics try to disguise this fact, inflation is, at its core, an expansion of the money supply. Plain and simple. Price increases are merely a corresponding symptom of a growing money supply. The more money in circulation to chase goods, the more prices rise. Where price increases are most acute depends on how the newly created currency is distributed in society.


After the United States failed to meet its obligation to redeem US dollars for gold in the early 1970s, it was able to drag the world onto the fiat currency system. This system uses paper currencies backed by nothing more than government decrees. The United States is at the heart of this system as the issuer of the world’s reserve currency – the US dollar. This special status allows the US to print the dollar to great excess because its status as a reserve currency creates foreign demand for it, which allows the US to export its inflation to the rest of the world. As a result, the US has the ability to create massive deficits. This mechanism also allows the European Central Bank (ECB) to create massive deficits as well, as long as it coordinates its monetary policy with the Federal Reserve. Of course, any country that rejects the US dollar usually ends up in the crosshairs of the US government. 

Crisis, followed by crisis, followed by...

However, there is a catch. Every crisis is met with an expansion of the money supply and the manipulation of interest rates to stimulate artificial demand. This, in turn, lays the groundwork for the next, larger crisis by enabling ever greater mal-investment. In previous cycles, price increases resulting from a deliberate expansion of the money supply were largely confined to the stock markets and real estate, as much of the monetary expansion was concentrated in the financial sector, triggering a so-called wealth effect among holders of real estate mortgages and owners of stocks.

In the age of fiat money, central bankers and politicians would have us believe that inflation is a positive development. They set absurd “inflation targets” and insist that any inflation above their stated “target” of 2% per year is “transitory.” Federal Reserve Chairman Jerome Powell expresses this sentiment at almost every Federal Open Market Committee (FOMC) meeting, and ECB President Christine Lagarde has naturally echoed this belief.

Have you ever gone shopping and noticed that the price of your favorite product has doubled and jumped for joy because of the increase? No, of course you haven't. Inflation only benefits central banks and governments trying to pay off their massive debts. The only catch is that they have to destroy your purchasing power to do it – a fact they want to hide from you.

The monetary expansion that followed the Great Financial Crisis of 2008, that is, the printing of money, or quantitative easing (QE), to allow interest rates to fall to near zero, began to lose momentum in the fall of 2019 when serious problems developed in the overnight lending market in the United States – also known as the repurchase agreement (repo) market. Essentially, the Federal Reserve was trying to roll back the support it had provided in the wake of the 2008 crisis, which in turn led to the repo crisis. Of course, the 2008 crisis itself was triggered by the monetary policy response to the 2000 recession.

This monetary system is nearing its inevitable end

Central banks desperately needed an excuse to once again expand their balance sheets and cut interest rates. The repo crisis provided the Fed with the pretext to resume QE and pump tens of billions of dollars of liquidity into the market every month. It refused to call it QE at the time, but that's exactly what it was. Not long after that came the Covid-19 pandemic, which provided the perfect cover for Western governments, driven primarily by the structure of the current monetary paradigm with the world's reserve currency – the US dollar – and its issuer, the Federal Reserve, at its center, to once again conjure trillions of dollars and euros literally out of thin air and artificially manipulate interest rates to zero – even negative – in a desperate attempt to prop up the crumbling monetary system.


Much of the current round of monetary expansion has been distributed to citizens in the form of helicopter money, or direct cash payments. This is a new development and a clear signal that this monetary system is nearing its inevitable end. Trillions in newly created currencies are now chasing the same supply of resources that existed before the pandemic. Basically, we live in a finite system with finite natural resources. Yet, at least for now, we still have the ability to infinitely expand the monetary supply with which to chase those finite resources, resulting in what amounts to endless artificial demand.

The spectre of hyperinflation

And now the catch. We are now at a point where Western central banks are, frankly, trapped. Interest rates have been artificially manipulated to zero. But neither the Fed nor the ECB has yet begun to reduce their balance sheets, although they keep saying they will eventually do so. Central banks now have no policy tools to respond to the next crisis. A crisis that will ironically and inevitably result from the misallocation they fueled by recklessly expanding their balance sheets and cutting interest rates to zero during the pandemic.

When the next crisis erupts, it will most likely come again from the repo market in the United States. Interest rates simply cannot be manipulated any lower as a countermeasure to the next crisis. If the central banks withdraw the current stimulus that our economies are currently hobbling along on, the whole system will collapse. That's why they only talk about reducing their balance sheets and allowing interest rates to rise instead of actually doing so. In the US alone, interest on the national debt is the fourth largest budget item – at interest rates of 0%! Imagine interest rates of  6%, 7% or 8% percent! The US would be bankrupt overnight. In response to the inevitable next crisis, they will have no choice but to flood the financial system with even more paper money, which sooner or later will lead to hyperinflation.

Western central bankers and politicians simply refuse to allow the necessary deflation that our system so desperately needs because over the last 50 years they have created a financial bubble so large that if left to burst unchecked it would plunge the world into a catastrophe that would make the Great Depression of the 1930s look like a Sunday walk in the park. However, their power rests entirely on this system, and they have no incentive to do the right thing.

What we need in the West is a strict, disciplined and controlled reduction in the money supply that would occur gradually over decades and a return to a sound monetary system. What we are currently experiencing and will continue to experience in the future is the exact opposite and will lead to the same catastrophic results that the uncontrolled bursting of the bubble would. As the unsustainability of the current paradigm becomes increasingly undeniable, the status quo will do everything in its power to maintain control of the collapsing system, including using climate change as an excuse to create trillions in new currencies out of thin air.

Our Western monetary system is like a brain-dead patient

Imagine an athlete on steroids. That athlete may seem unbeatable on steroids, but without those injections, we are left with something very unimpressive. An economy built on artificial 0% interest rates and constant injections of endless fiat money conjured out of thin air resembles that of an athlete on steroids, and we all know what long-term steroid abuse leads to. Unfortunately for us in the West, we have been abusing the proverbial steroids long past our physical expiration date. Right now, our Western monetary system is more like a brain-dead patient being propped up on life support.


In anything remotely resembling a free market, savings from productive undertakings are supposed to spur economic growth. Interest rates, which are simply the cost of borrowing money, are supposed to be determined by market forces, not a de facto politburo in the form of unelected central bankers. Businesses should grow because they remain competitive, not because they have access to cheap paper money conjured out of thin air by central banks. This is why Western mega-corporations never go away and just keep getting bigger. This happens at the expense of small businesses that don't have access to this cheap fiat.

The facade of democracy erected on the current monetary system will continue to collapse as this system is played out to its logical end – namely hyperinflation. And when the central bankers – and the politicians who enable them – finally bring the Western world to its knees, remember that they are the ones to blame – not the Russians, not the Chinese, no one else. Only them.



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Read from top.




a two way bet...


"eitheror/maybe/maybenot/rightorwrong prediction"



By Paul Krugman...


Back in 2010 a group of conservative academics, economists and money managers signed an open letter warning that the efforts of the Federal Reserve to support the economy would be dangerously inflationary. But the inflation never came. So four years later Bloomberg reached out to as many of the signatories as they could, to ask what happened.

Not one was willing to admit having been wrong.

I don’t want to be like those guys. So I’m currently spending a fair bit of time trying to understand why my relaxed view of inflation early last year has been refuted by events. What I want to do today is share where I am now on that topic, and what my current take says about future policy.

Last spring the debate was focused on the American Rescue Plan, the Biden administration’s large spending package. A number of economists, including Larry Summers, Olivier Blanchard, and Jason Furman, warned that this package would overstimulate the economy — that output and employment would soar to levels that would create a lot of inflationary pressure.

Those of us on the other side argued that the risks of excess spending were much less than they warned — that large parts of the Biden package, like aid to state and local governments, would end up being disbursed gradually over time and therefore not have that much of an inflationary impact. To use the jargon, I argued that the A.R.P. would have a low “multiplier.”


So here’s the funny thing: The multiplier does indeed seem to have been low. The economy has expanded fast, but it started in a deep hole, and at this point is still if anything a bit below its prepandemic trend.




Now, a labor market in which jobs are easy to find and workers can bargain for higher wages is a good thing. But the fact that labor markets are so tight even though employment and real G.D.P. are below prepandemic projections suggests that we can’t rely on those projections to assess the economy’s productive capacity. For whatever reason or reasons — presumably reasons linked to Covid — the U.S. economy apparently can’t sustainably produce as much as we expected.


And that in turn tells us that it’s time for policymakers to pivot away from stimulus — in particular, that the Federal Reserve is right to be planning to raise interest rates in the months ahead. As I read the data, they don’t call for drastic action: the Fed should be taking its foot off the gas pedal, not slamming on the brakes. But that’s a story for another day.

For now, the moral is that Covid-19 means that we can’t assess where we are simply by comparing our situation to the prepandemic trend. That trend, at least, no longer appears to be our friend.


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