There was a time that even economists understood that the story of inflation went well beyond increases in the stock of money. But Keynesian theory, with its Y=C+I+G, is now so embedded across the mindset of everyone as a means to make economies grow, and not just amongst economists but there as well, that the bizarre rates of growth in public spending in the US is seen as normal and generally appropriate. In reality, it is not just the cause of inflation but will create vast pockets of poverty as well.
Saw the chart at Powerline with the heading about class dismissed. There was at least this one comment so that someone else does see the deeper nature of the problem.
If an economist tells you modern monetary theory works, that person is NOT an economist. Run.
We are on the edge of a precipice in so many ways that it is hard to see how we will survive the next five years.
LET ME ALSO ADD THIS:
Came across a couple of additional posts that seem to add to the issue. First from Instapundit.
“I know there’s a lot going on in the world today, but can we just take a moment to reflect on how crazy it is that the United States House of Representatives just passed a $1.5 TRILLION spending bill that no one has read?”
And then from the comments there was this.
Of course, nothing can be confirmed until it is officially denied.
“I’m SICK of this stuff!”— Townhall.com (@townhallcom) March 11, 2022
Joe Biden is furious that Americans blame inflation on his government spending. pic.twitter.com/quRxB2lfvA
18 thoughts on “The causes of inflation go well beyond growth in the supply of money”
Steve, I’m an economist who renounced the Y=C+I+G hypothesis many moons ago, we are just about to enter a golden age of inflation.
The (very obvious) supply shortages are just the beginning.
I’m reminded of one of the lines in a Lazarus Long story where the colony he set up decided to get rid of his expertise and wanted to print more money.
“I listened to them for an hour and at the end I decided all the learning in the world couldn’t surpass the idiocy of people who wanted not only their cake and to eat it too, but they wanted someone else to grow the grain and make the flour.”
Quantitative Easing is…
I have difficulty believing the world is falling for this stupidity, but there are those who are so engrossed in playing with the columns of numbers, they are unaware of the storm outside their doors.
Truly, we are in for a world of hurt.
And we were so close to founding colonies on the Moon and Mars.
“Fell at the Last Hurdle” will be written on the Wests tombstone.
I think this describes how fragile the system is – The LME is owned by China and the margin calls would have bankrupted one of their own.
The whole damn thing is crumbling in front of us, and it only took a month to get out of control.
I read the article as arguing against money printing to allow governments to borrow to spend on stuff. This is valid. Chickens are coming home to roost.
We Also know from history of economic collapse in say Venezuela or Zimbabwe that inflation occurs when production falls . You get stagnation and inflation simultaneously. Joe Biden has managed to pull this off do the first time since the mid seventies.
In fact he’s succeeded in both a collapse in production and distribution and money printing and government debt and a flood of spending.
You must admit this takes a special kind of genius.
Time to start growing your own food and building a community
We went to town yesterday for supplies, including fill up of diesel containers. Holy cow! Diesel suddenly $2.20 litre. Husband went bonkers & we are now looking to procure large scale diesel storage at farm. ( for Farmer Gez et al – we are just retirees on relatively small holding ) . I fear it is a bit too late. But we are preparing for the worst.
Further to previous – we have already taken most of cash out of bank . Most of our assets are income earning property – & rest invested in something husband knows lots about – rare collectible vehicles. Just got to keep mice at bay!
everyone should be preparing for the worst
Got to love governments. They artificially restricted the supply of labour via vax mandates (so cost goes up), then they imposed all sorts of extra compliance costs on businesses (PPE, check ins, door nazis), then they impose stupid emissions requirements on B-Doubles, which reduces the availability of trucks (plus vax mandating drivers), then they banned drilling everywhere, allowed greens to sue drillers, allowed stinkies to chain themselves to train tracks and oil refineries thereby causing oil and gas production to fall. And now they’re encouraging a war between a big oil producer and a big wheat producer. And after all of that you get this:
Joe Biden Rages: ‘I’m Sick’ of Americans Blaming Me for Inflation, Not Vladimir Putin (11 Mar)
You gotta laugh and cry simultaneously at this sort of behaviour.
Husband went bonkers & we are now looking to procure large scale diesel storage at farm.
Nice target for robbers.
rare collectible vehicles
If things get really bad nobody will want stuff like that.
Inflation has been running rampant in the U.S. since almost immediately Biden got into office, but it’s all Putin’s fault twelve months later!
The elites never die – at least, not naturally.
All large landholdings have diesel storage tanks. We are littleys, and haven’t thought it worth the expense up until now. But times are a’changing…… robbers? ……bit short on ammo….but guns are in tip top condition.
Better off stocking up on trade goods like whisky, champagne, durable workwear, ammo, guns*, antibiotics***, steel plate, cement, etc.
* I don’t know your current circumstances but membership in a local rifle club is a must – if there’s not one available start one. Make sure you fund weapons for the club. Or start a security company** and have the locals join as volunteers for community property like churches showgrounds, water supply etc. Each volunteer can have their own weapon even if it is stored at the local rifle range. No taking them home so it gets rid of that problem of storage.
**Why are there so many security companies in Australia with members names starting with Mohammed?
***Medical supplies are reasonably short lived, so donate them to the local hospital 3 months before the UBD for the tax refund.
The same with bulk food – Baked beans and spaghetti store well and can be donated to the local food assistance group again for tax purposes.
Get a community group of people together to run a small chook farm. About 100 chooks will provide a reasonable food supply.
Is there a gardening club in the area? Get them to do a home garden program – if people specialise in one or two crops control can be kept so not everybody grows tomatoes.
Fuel. Get a local supplier to keep farm tanks topped up/kept in 44’s with storage additive.
Gensets. If you’re on a farm you will already have one. If not, Able sell them at really good prices – see if you can do a bulk deal and delivery. One of the blokes who posted on the Oldcat hunted out mine gensets and sold them – forgotten who.
Water. Rainwater – collect it. The local council may be able to help with procurement/price.
The last thing to be sure of is who are you going to let in to your community? Because you cannot survive in a post crash world without friends, neighbours, helpers. And you cannot help the no hopers who arrive demanding accommodation, feeding and security while not contributing.
That’s just a conspiracy theory.
The most important thing to have during an economic collapse is community. A strong community that will support each other is crucial, as you can’t survive easily on your own.
This collapse has been talked o out for 20 yrs and nothing has corrected.
Bruce – brilliant summation.