Inflation Is Always and Everywhere a Monetary Phenomenon

Commentary The fiscal response during the COVID-19 recession has been unprecedented. Passage of the CARES Act pumped more than $2 trillion into the economy. CARES Act II will likely keep the pump primed. But for this fiscal stimulus to have its intended impact of fueling the nascent recovery, the government needs a white knight. That knight has taken the form of Jerome Powell, chair of our nation’s central bank—the Federal Reserve (Fed). If it weren’t for the Fed being at the ready to sop up all those new government bonds being sold to fund the growing national debt, the fiscal impact of the CARES Act and probable CARES Act II would be muted. It’s not a coincidence that as U.S. government sales grew by more than $2 trillion to fund the CARES Act, so too did the Fed’s balance sheet as it purchased all those bonds. This unmistakable evidence of the remarkable coordination between the fiscal and monetary arms of our government points conclusively to what economists technically call “monetizing the debt.” An apt metaphor for this technical term is “running the printing press.” In light of the total absence now of any inflationary pressure, one might wonder what’s wrong with keeping that press going. If the government can provide fiscal relief during an economic crisis with the Fed’s full cooperation and even encouragement without any negative consequences, then why not party on? The answer to that question lies in the difference between the short run and the long run. It’s true in the short run, with the nation reeling from the devastating economic effects of the pandemic, that the government can spend and spend without inflation rearing its head. With unemployment so high and investors fearful of the future, additional government spending is offsetting lower private spending. Even though one kind of spending replaces another, aggregate spending stays the same. So there’s no pressure on prices. That short-run mindset explains why the Fed will keep the party’s punch bowl generously spiked. In the long run, however, the scenario changes. As the recovery continues and COVID-19 begins to dim in our collective memory, people will start to open up their pocketbooks. Unemployment will decline, and investors seeing the beauty of such historically low interest rates will see a brighter world for their best-laid plans. Eventually, the private sector joins the government in its spending spree, and prices begin to edge up. That’s when the Fed is likely to drain the punch bowl. But by then, it’s usually too late. As the great economist and Nobel Laureate Milton Friedman said, “Inflation is always and everywhere a monetary phenomenon.” But as a former student of his, I know that professor Friedman would add that the relationship between monetary growth and its eventual impact on prices is a long and variable one. Recent research at the A. Gary Anderson for Economic Research at Chapman University bears him out. Since the end of World War II, there have been four periods when year-to-year growth rates in the monetary measure, M2, exceeded 13 percent. As World War II was drawing to a close, for example, the Fed was spooked by the negative effects on the economy of a steep drop in defense spending. So, in late 1944, the Fed turned on the spigot, increasing M2 at a year-to-year rate that hit 20 percent. At first, nothing happened, but six quarters later (a year and a half), inflation started to increase, moving up from around 2.5 percent to almost 20 percent one year later. Fighting a recession in the early 1970s, the Fed increased M2 to almost 14 percent. During that monetary binge, prices actually declined. But nine quarters after, M2 started increasing; inflation began to increase from 3 percent in the third quarter of 1972 to 12 percent by the end of 1974. This pattern repeated itself in a mirror-like way in another monetary-price cycle in the mid-1970s. The fourth instance when M2 growth exceeded 13 percent did not occur during the Great Recession as one might suspect but actually had to wait until 2020 during the early months of the current pandemic. But when it happened, it did so with a vengeance, as M2 shot off at a 20 percent rate of growth. So far, like in all previous episodes of extreme forms of monetary stimulus, prices haven’t moved. But we’re still in the short run. A regression equation we’ve estimated that covers 1970 to the current period shows that, on average, there’s a nine-quarter lag before the long-run kicks in. Such a lag suggests that inflation won’t show its face until late 2021 or early 2022. Will fear of that deter the Fed from “running the printing press?” Hardly. As another great economist of the 20th century, John Maynard Keynes, said, “In the long run we are all dead.” James L. Doti is president emeritus and professor of economics at Chapman University. Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

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This Gold Bull Market In Unlike Anything We’ve Seen, Failing Fiat Currency, Inflation, Newfound Gold

from Silver Report Uncut: TRUTH LIVES on at

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James DavisOctober 16th, 2020Future Money Trends This article was contributed by James Davis with Future Money Trends.  Do you think Donald Trump is going to win or do you think it’s Biden? Whatever your answer is, MY RESPONSE remains the same: MARKETS are headed M-U-C-H H-I-G-H-E-R! The amount of cash on the sidelines that’s EARNING NOTHING is just SO EXAGGERATED that we expect that another $1tn to $1.5tn is HEADING BACK to the stock market and risk assets. Treat this pandemic AT FACE VALUE: highly contagious and lethal only to a very small percentage of the population. The media has convinced some people that they’re living THROUGH END TIMES, but I implore you to shake it off and THINK FOR YOURSELF now that you KNOW the facts. You should be protecting your OWN FAMILY and your OWN CAREER from imminent danger and FINANCIAL RUIN from DRACONIAN measures being implemented. Wake up! This is a giant wealth transfer; the ramifications of what just happened to the world in the past few months are yet TO BE DETERMINED. I will not be doing you a disservice by encouraging you to GET INSPIRED to get on with your life IMMEDIATELY. The markets believe they’ve FIGURED IT OUT; they’re betting on a BIDEN VICTORY and a massive stimulus package that will offset the tax hikes and all the increased regulations that will SURELY COME with a Democrat victory; they believe America has HAD ENOUGH of Trump, but I’m not convinced it’s that cut and dry. I’ll crawl over broken glass to make sure you TRULY UNDERSTAND that there’s a BULL MARKET going on, no matter HOW UNLIKELY or how weird it is to put MONEY TO WORK. You don’t ALWAYS have to understand why prices are rising, but you SURE AS HELL must have seen the gains that we’ve BEEN MAKING – they’re off the charts! Courtesy: U.S. Global Investors Your heart will tell you when TO MOVE. Your fate has NOTHING TO DO with this election; the country’s future has a lot TO DO with it, but you have to SEPARATE FROM THE HERD – are you ready to accept BETTER CONDITIONS? Entire industries, whole economies, great nations, and giant corporations will be built as a result of this COVID-19 WORLD; take what’s yours and STOP AT NOTHING. Be a dreamer. President Trump is Breaking Down the Neck of the Federal Reserve! He wants zero rates and QE4! You must prepare for the financial reset We are running out of time Download the Ultimate Reset Guide Now! Author: James DavisViews:Date: October 16th, 2020Website: Copyright Information: This content has been contributed to SHTFplan by a third-party or has been republished with permission from the author. Please contact the author directly for republishing information. SHTFPLAN is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to



This article was contributed by Tom Beck with Portfolio Wealth Global. If you conducted your own DUE DILIGENCE and followed our Watchlists (1, 2, 3, and Tech), as well as our TOP IDEAS for holding precious metals and mining stocks, your portfolio is PERFORMING BETTER than the world’s TOP HEDGE FUNDS and quant computers; you’re in the top 0.01% of ASSET RETURNS. And, I have even better news for you: This is just THE KICK-OFF! All across the globe, there’s a massive STIMULUS PLAN going on, as well as a GENERATIONALLY-STRONG surge of innovation and entrepreneurship. Hardship and struggle are BIRTHING DISCIPLINE, a sense of carefulness in corporate behavior, and better conditions for the future. Even MORE IMPRESSIVELY, we feel that gold is still a DOUBLE from here. Courtesy: Ray Dalio’s hedge fund has been UNDERPERFORMING FOR YEARS, but the two things he did get right are gold and China. We believe most Americans are thinking of China with a 30-YEAR DELAY. They do not yet realize just how technologically advanced it is, and they certainly don’t appreciate its IMMINENT WEALTH BOOM. China’s boom is actually one of the biggest reasons for my REVISED TARGET for gold by 2023 of $4,000/ounce, up from $3,300. The stock market is going MUCH HIGHER, regardless of who’s going to win this election. The chart is clear: Courtesy: The S&P 500 index is headed to 5,000 points within 2-3 years. Stocks are expensive (we know), but the REAL BUBBLE, perhaps the only one, is in GOVERNMENT BONDS. Why on earth is $17tn parked in negative-yielding assets? truly believes that about 5% to 10% of that money will flow into gold, driving its price up 105%. When gold hits our FINAL TARGET of $4,000 for this cycle, we forecast a 40:1 or 45:1 gold-to-silver ratio, implying silver’s target is around $90 to $100. No one has yet understood just how much demand for silver COULD GROW if the U.S. dollar starts to lose purchasing power in a noticeable fashion. Most Americans have no idea what constitutional money is or how silver protects their purchasing power. They’re hypnotized. Courtesy: We believe they’re about to receive a GIANT WAKE-UP CALL! The Federal Reserve can’t really control much anymore, by way of interest rate hikes. If inflation does increase, it will turn into an everyday mainstream problem. Just as fast as Americans buy guns when times seem uncertain or gobble-up toilet paper in the Covid-19 quarantine like programmed robots, so will they purchase a few ounces of silver, when inflation is broadcasted on the news. As you know, the ABOVE-GROUND supply is only 2.5bn ounces, which IS NOTHING in the grand scheme of things. Are you ready to TAKE WHAT’S YOURS? If Biden wins this election, the dollar could plummet by 20% in his first term. His programs are giant PRINTING OPERATIONS to Americans. His stance on China is more relaxed and we believe that in the big picture, silver will thrive! Gold $4,000; silver $100 — ride ‘til you CAN’T NO MORE! President Trump is Breaking Down the Neck of the Federal Reserve! He wants zero rates and QE4! You must prepare for the financial reset We are running out of time Download the Ultimate Reset Guide Now!

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The Coming Food Crisis

Please respect our republishing guidelines - Click Here While central banks are busy depreciating money, governments have spent the last several months debasing the most important currency in modern economics: tradeoffs. Since the Coronavirus pandemic forced folks to seek shelter in their basement à la Joe Biden, policymakers around the world have collectively decided that COVID-19 takes precedence over everything else, even if that means destroying the lives of tens of millions of people. Leaders decided to shield the public from a respiratory illness that has a minuscule mortality rate at the expense of the public purse, small business, and the broader economy. The next casualty? Your dinner plate. Food Inflation in Aisle Three At the beginning of the virus outbreak, grocery store shelves were bare. Consumers found it hard to locate toilet paper, flour, and meat. With time, the private enterprise system worked its magic and shipped various staples to supermarkets nationwide. But for cash-strapped households, it was bittersweet because the newly arrived food became a lot more expensive. The cost of food has risen around 4% each month since April in the United States, and some items are more expensive than others. This year, prices for meat, poultry, fish, and eggs have spiked more than 7% collectively. It does not matter if you eat at home or a restaurant, you are paying more for food. Before the pandemic, shrinkflation was prevalent, so now consumers are likely doling out more for less. And this is not only in the United States. In Canada, for example, shoppers are also witnessing a spike in their grocery bills by as much as 3% – and growing. With COVID-19 precautions and higher transportation expenditures, food production is costing more than it did before the pandemic. Another factor is that more consumers are buying their groceries online, which typically comes with a 7% markup. China is another market grappling with ballooning food prices. According to the National Bureau of Statistics, the nation’s food prices swelled 11.2% in August from the same time a year ago, with pork leading the way (52.6%) amid the African Swine Flu and the virus outbreak. The World Bank sounded the alarm that the worst is yet to come because of disrupted supply chains. “As the coronavirus crisis unfolds, disruptions in domestic food supply chains, other shocks affecting food production, and loss of incomes and remittances are creating strong tensions and food security risks in many countries,” the group stated in a report. A Global Food Shortage? The United States is unlikely to experience a food shortage unless the government chooses to impose the socialist hallmarks of production quotas and price controls on a wide-scale basis. American farmers are producing ample supplies of corn, wheat, and soybeans. It is the rest of the planet that will suffer food scarcity because of public policy, according to a couple of new reports. The U.N.’s Committee on World Food Security forecasts that more people will die as a result of malnutrition and comparable diseases as a direct result of the pandemic. The Center for Strategic and International Studies (CSIS) projects that 265 million people worldwide will face food insecurity. Oxfam International anticipates 12,000 people will perish each day from hunger by the end of 2020. Food insecurity is most pronounced in Lebanon, North Korea, Syria, Yemen, Africa, and Venezuela. Many of these places were already enduring humanitarian crises, and the Coronavirus amplified their plight. In recent months, there has been speculation that China could experience a food crisis, floods, and insect infestations in the aftermath of the pandemic. But the government has kept quiet about the severity of the looming threat, choosing to import and stockpile millions of tons of grain, rice, corn, and pork for its strategic reserves. Analysts are concerned that if farmers are suffering from acute hunger, they might decide to prioritize buying food over planting seeds for tomorrow. “Food producers also face large losses on perishable and nutritious food as buyers have become limited and consumption patterns shift. Though food insecurity is by and large not driven by food shortages, disruptions to the supply of agricultural inputs such as fertilizers, seeds or labor shortages could diminish next season’s crop,” the World Bank added. At least the world will have a vaccine… Democide Over the last century, the free-enterprise system has lifted millions of people out of the ashes of destitution and despair. The world has never been richer in food and energy, allowing the poorest of people in developing nations to enjoy a modicum of the fruits of affluence. Everyone is better off now than they were at the start of the new millennium, whether you are living in the United States or India. Unfortunately, the government imprisoning the population is reversing many of the gains the global economy has made. Whether or not politicians’ concerns are authentic, their actions have decimated the bright future the world once had – and there is no going back, even if Dr. Anthony Fauci gives the thumbs up in the next several years. When will the state be charged with democide? ~ Read more from Andrew Moran.

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Cost of Living Continues to Rise RAPIDLY As Americans Struggle to Get By

Mac SlavoSeptember 15th, The Bureau of Labor Statistics just released new data that says the cost of living is going up as the main street economy crashes and the dollar loses its purchasing power. This also comes as more and more Americans continue to struggle to get by in the aftermath of the government’s reaction to the scamdemic. The new numbers released are comparing the consumer price index, which is essentially the price of common things we pay for all averaged together, of 2019 to that of 2020. The number has gone up. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in August on a seasonally adjusted basis after rising 0.6 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.3 percent before seasonal adjustment. – Since the Federal Reserve, the central banks, is continuing to bail out corporations and create money out of thin air, inflation and costs for basic necessities will continue to rise. Some areas of the economy are being hit harder than others too. The cost of food has jumped in the Bay Area of California, propelled by meat, poultry, and fish prices that have skyrocketed, joining soaring electricity costs, according to a report by Mercury News. Meat, fish, and poultry prices have soared a whopping 17.4 percent over the past 12 months ending in August in the Bay Area. This means that these prices are at a super-heated pace that’s 11 times greater than the region’s cost of living during the same one-year period. Because the cost of living is going up as the economy is struggling for everyday folks, it’s important to make a plan. Preparedness should include financial emergencies. Even though the dollar is crashing, having a little extra money on hand to be able to pay 3-6 months’ worth of bills will help you get through tough times. All it would take to eliminate the middle class is one more lockdown. Financially Prepped: The Importance of an Emergency Fund President Trump is Breaking Down the Neck of the Federal Reserve! He wants zero rates and QE4! You must prepare for the financial reset We are running out of time Download the Ultimate Reset Guide Now! Author: Mac SlavoViews:Date: September 15th, 2020Website: Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to Please contact us for permission to reproduce this content in other media formats. SHTFPLAN is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to

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Inflation, deflation and other fallacies

by Alasdair Macleod, GoldMoney: There can be little doubt that macroeconomic policies are failing around the world. The fallacies being exposed are so entrenched that there are bound to be twists and turns yet to come. This article explains the fallacies behind inflation, deflation, economic performance and interest rates. They arise from the modern states’ overriding determination to access the wealth of its electorate instead of being driven by a genuine and considered concern for its welfare. Monetary inflation, which has become runaway, transfers wealth to the state from producers and consumers, and is about to accelerate. Everything about macroeconomics is now with that single economically destructive objective in mind. Falling prices, the outcome of commercial competition and sound money are more aligned with the interests of ordinary people, but that is so derided by neo-Keynesians that today almost without exception everyone believes in inflationism. And finally, we conclude that the escape from failing fiat will lead to rising nominal interest rates, with all the consequences which that entails. The inevitable outcome is a flight to commodities, including gold and silver, despite rising interest rates for fiat money. Demand-siders and supply-siders In a macroeconomics-driven world, economic fallacies abound. They are periodically trashed when disproved, only to arise again as received wisdom for a new generation of macroeconomists determined to justify their statist beliefs. The most egregious of these is that inflation can only occur as the handmaiden of economic growth, while deflation is similarly linked to a recession spinning out of control into the maelstrom of a slump. This error is the opposite of the facts. Conventionally, macroeconomists split into two groups. There are the Keynesians who believe in stimulating demand to ensure there will always be markets for goods and services, which they attempt to achieve through additional spending by governments and by discouraging saving, because it is consumption deferred. And there are the supply-siders, who believe in stimulating production through lower corporate taxes and lighter regulation. Both demand and supply-siders advocate monetary inflation in the belief that their methods stimulate an economy so that government spending need not be cut. The maintenance of government spending is the objective of both approaches, not the welfare of economic actors, who are always regarded as the state’s milch cows. While supply-side reforms have proved more attractive to free traders than Keynesian demand stimulus, the end result is the same: the combination of taxes and monetary seigniorage from the productive economy transferred to the state is the objective either way. The smoke and mirrors to get people to part with their wealth are the misuse of statistics. The price consequences of monetary inflation are suppressed by statistical method, and economic growth is substituted for economic progress, the combination leading to confusion for nearly all economists. But the facts behind the measure of growth, gross domestic product, are easily explained. First, the modelling assumptions. As a starting point we must assume there is no inflation of money and credit and the quantity of money is fixed. That being the case, and assuming no change in the statistical make-up of GDP, nor in the quantity of hoarded cash, and assuming no change in the balance of external trade, there can be no increase in nominal GDP, because whatever people make, sell and consume amounts to the same total expressed in money terms compared with the previous period. It is an accounting identity. Whether savings increase or decrease is immaterial, because GDP is the total of final goods and intermediate goods, so if an economy evolves from being consumer to savings driven or vice-versa, GDP must remain unchanged. The split between profit and costs is immaterial as well, the sum of the two being contained within the GDP total. But variations in the rate of economic progress will always be reflected in the individual prices and quantities of goods and services produced without the total monetary value of all transactions changing. A progressive economy will see more and better goods and services at lower prices, while for a failing economy the opposite is be true. The next step should not be beyond the understanding of anyone. If a fairy godmother magically created some extra money for the people in an economy to spend, it must simply be added to the GDP total, whether they spend it or save it — as long as they don’t hoard it. Saving circulates, because it is money made available for investment. Hoarding is taking money out of circulation, which is why in our model we must assume the quantity of money hoarded does not change. Macroeconomists confuse the additional money injected into the economy with growth. It is growth in the money total only, because it is impossible to judge the degree to which it is used to economic advantage. Economic growth has become confused with economic progress. Economists today appear unaware of this distinction, which Ludwig von Mises separated out into what he called an evenly rotating economy. He defined it as follows: “An imaginary economy in which all transactions and physical conditions are repeated without change in each similar cycle of time. Everything is imagined to continue exactly as before, including all human ideas and goals. Under such fictitious constant repetitive conditions there can be no net change in any supply of demand and therefore there cannot be any change in prices.” [i] The inconvenient truth for statists is that with GDP they can only measure the quantity of money in total transactions, not how it is used. This fits von Mises’s description of an imaginary economy that evenly rotates and it is vital for any student of economics to understand this point. It matters not whether he or she is a demand or supply-sider; both categories of macroeconomic emphasis wrongly believe in targets for GDP outcomes, which are meaningless except for the purpose of maintaining government revenue. And that is the key to their interest. Read More @

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