by Brandon Smith, Alt Market:
One of the more difficult aspects of working in economic analysis is the problem of rampant disinformation that you have to dig through in order to get to the truth of any particular issue. In this regard, economics is very similar to politics. The propaganda is endless and debunking it sometimes feels like moving a mountain with a teaspoon.
Establishment media sources lie incessantly about our financial conditions, and when they are finally cornered and forced to admit how bad things are, they then lie about the causes. That said, I find that these lies are usually designed to do one of two things: Over-complicate the problem so that people give up thinking about it, or, distract from the problem so that people blame a scapegoat.
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As for inflation, here is the bottom line:
Central Banks And The Fiat Flood
Rising prices are caused by two main drivers. The first is money creation, or too many dollars chasing too few goods. Central banks around the world have been FLOODING the system with fiat currency ever since the debt crisis of 2008 and the Federal Reserve within the US is the worst violator by far. We are talking about tens of trillions (or more) in money creation, all supposedly as a means to stall or prevent a deflationary crash.
By the time the pandemic lockdowns were initiated and the Fed dropped $8 trillion+ onto the economy through stimulus measures like covid checks and PPP loans, the total US money supply was already at destructive levels. The covid stimulus was simply the straw that broke the camel’s back. So, if you want to know who is directly to blame for your daily expenses rising 30% or more in the span of three years, the first set of criminals are the central bankers.
Governments and certain corporate partners are also to blame, but the central banks are the root mechanism for all inflationary movements. It’s my belief (according to the evidence) that central banks have deliberately triggered a stagflationary crisis with the intent to forcefully replace cash based economies with a new digital and cashless global economy. However, that’s a discussion for another article…
Shortages And Core Resources
The other primary cause of rising prices is shortages or disruptions in key resources including oil and energy. Keep in mind that the war in Ukraine has led to the west being cut off from large portions of the resource rich Russian market. And, the war in Gaza has led to groups in the Middle East like the Houthis denying a multitude of cargo ships and oil tankers from traversing the Red Sea.
By themselves, each one of these events seems like a small threat to the global supply chain, but when they pile up together the effects become detrimental. For now, the biggest factor is rising energy prices because this is the key resource that allows all agriculture and manufacturing to function. Every time oil prices rise you’re going to see prices in everything else rise.
This is the exact reason why the Biden Administration continued to dump the US Strategic Oil Reserves on the market for the past couple years. This was their way of manipulating oil prices down in order to mitigate or hide the greater effects of inflation. Now that they’re being pressured to refill those reserves and start buying (at a much higher price) global oil prices and US prices in particular are spiking again.
Media Disinformation And Crushing Food Costs
Food costs have risen by 30% or more depending on the product since the beginning of 2020, and even though CPI reports several months ago showed a “slowdown” in overall inflation, this does not mean prices are going to go down anytime soon. In fact, they will only keep rising with each passing year.
CPI is a tool for measuring the AVERAGE price increases of over 80,000 products and services across a wide spectrum. Many of these items are not necessities and so they dilute the actual inflation we are seeing in everyday expenditures. If we were to look at an average of daily necessities like housing, energy, food, etc. then CPI would read far higher.
When the media touts a lower CPI print as a sign that the economy is improving, what they usually don’t mention is that the stat only represents how much higher prices are going to go. A lower CPI does not mean costs on the shelf are going to go down. Inflation is cumulative.
