December 21, 2020 – For the past year, we at Patriots’ Soapbox have been looking at the economic indicators and other news and warning people about what could be coming in 2021 and beyond. In September of 2019 I published an article warning about the latest banker swindle and central bank takeover of government. In October of 2020 I wrote a long and detailed warning about the market woes and a potential crash. If you haven’t already read it, I recommend you read it now. If you are a regular listener to my Digging Deeper shows, you will have noticed that since March of this year I have been encouraging people to stock up on food and water and to try to have six months worth of supplies on hand.
The Latest “Stimulus Bill” is Another Corporate Bailout
During this Christmas season, the most insulting thing imposed upon Americans this month is the so-called latest “stimulus bill” to distribute a paltry $600.00 check as they face life-altering evictions and the loss of their small businesses. My heart breaks for millions of Americans who are behind on their rent and who have been issued eviction notices right before Christmas. There are millions of Americans who won’t be having a Christmas this year and who will spend their holidays in line at food banks and desperately trying to find a place to stay come January.
None of this had to happen. So much pain and heartache could have been avoided by opening up the country. Worthless politicians, who haven’t missed one paycheck this year, have decided to redistribute the “wealth” of poor and low income American taxpayers to corporations and big industry. It is the greatest transfer of wealth in the history of our nation.
We still don’t have text yet for this massive spending bill, and we’ll likely be expected to vote on it later today.
Just another bill we have to pass before the American people discover all the goodies that special interests jammed into it over the past week. https://t.co/l2A6ygSEPF
— Rep Andy Biggs (@RepAndyBiggsAZ) December 21, 2020
Representative Biggs claims most of the politicians haven’t even read what is in the bill they are signing.
— Dr. Mitch – Sec. of Agriculture (@MakeMineADoubl2) December 20, 2020
Ted Lieu can’t even show up in person to do his “job” but continues to get paid to sit on his rump all day and vote by proxy from home.
The stimulus is politicians destroying the economy with garbage policies while they flout the rules and party then offering to extract nearly 1 trillion dollars from working class people, give them back 600$ each and give the overwhelming majority to big businesses
— Tim Pool (@Timcast) December 21, 2020
Tim Pool is absolutely correct here. It’s a disgusting insult to the American people.
So, lets take a look at what is actually in the bill to see what is marked to help Americans and what will go to corporations. Both parties have touted this bill as a “relief” bill for the “American people,” but is that really the case? Zero Hedge breaks it down and looks at the fund allocations and some of the pork:
With the latest, $900 billion covid-stimulus deal now done (which unless the Democrats win the Georgia Senate runoffs in 2 weeks will be the final covid stimulus bill according to Goldman), attention turns to what’s actually in it.
First: the good news – the bill will include a fresh round of benefits for small businesses as well as the usual one-time pittance for peasants, amounting to a $600 check. Here are the key components:
- Direct payments of $600 to most Americans ($600 per adult and $600 per child); the amounts decrease for individuals with more than $75,000 in income and $150,000 for couples.
- $300-per-week in enhanced unemployment benefits through March. Expiring programs for gig workers and the long-term unemployed also would continue.
- $284 billion for the Paycheck Protection Program that provides
grantsforgivable loans to small businesses, arguably the most successful and also most abused program of the CARES act. This represents the bulk of the $325 billion the bill puts toward small businesses
- $82 billion for education: includes $54.3 billion for K-12 schools and $22.7 billion for colleges; governors would get $4.05 billion to spend on education aid at their discretion. For-profit colleges would get $908 million for grants to students, and another $1.7 billion would be set aside for historically black colleges, tribal colleges, minority-serving institutions
- $10 billion for child care.
- 15 billion in grants for theater operators and owners of small performance venues.
- $25 billion in rental assistance and an extension of the moratorium on evictions
- $13 billion in funds for food-stamp and child-nutrition benefits.
- $30 billion for the procurement and distribution of a Covid vaccine, as well as testing and tracing.
- $1.8 billion in tax credits for businesses to provide paid leave.
Of course as with any fiscal stimulus that is nearly $1 trillion, there will be lots of pork and other shady components, thrown into the bill. One such questionable kicker is the $15 billion in payroll assistance to airlines that will in theory allow them to return more than 32,000 furloughed workers to their payrolls through March 31, according Reuters. In reality, since there is no enforcement clause, we wouldn’t be surprised if many of the airlines continue to quietly layoff employees and use the funds to repurchase stock.
U.S. airlines furloughed more than 32,000 workers in October, after a six-month $25 billion bailout measure expired on Sept. 30. According to Reuters, airline workers would be paid retroactive to Dec. 1 and airlines would have to resume flying some routes they stopped after the aid package expired, congressional aides briefed on the talks said earlier. While airline workers could not be furloughed through March 31 as a condition of the assistance, airline lawyers will find countless loopholes around this contingency in the next 24 hours.
Unfortunately, even if it is used as intended, it won’t last airlines even 3 months at current cash burn rates: US carriers are losing $180 million in cash daily, with passenger volumes down 65% to 70% and cancellations rising, industry lobby Airlines for America said.
The new assistance program is expected to mirror the $25 billion program approved by Congress in March, which required larger airlines to repay 30% of the payroll grants over time and offer the government warrants. It is also expected to include minimum flight requirements. The aviation assistance comes after five months of furious lobbying – first by aviation unions and later by airline executives – who argued the industry (which repurchased over $50 billion of its own stock in recent years) desperately needed new government help as travel demand remains devastated by the COVID-19 pandemic.
The $45 billion COVID-19 transportation package is also set to include $1.75 billion for airports and $200 million for airport concessionaires and $2 billion for the private motorcoach, school bus and ferry industries. Aside from airlines, the stimulus will include $1 billion to the Amtrak railroad, $14 billion for public transit systems and $10 billion for state highways. It is also expected to include significant changes to how the Federal Aviation Administration certifies new airplanes following two fatal Boeing Co 737 MAX crashes that killed 346 people.
In addition to a $15 billion airlines rescue bridge line, the draft language of the emergency coronavirus relief package includes a tax break for corporate meal expenses. President Trump has talked about securing the deduction – derisively referred to as the “three-martini lunch” by critics – as a way to revive the restaurant industry badly battered by the pandemic; Treasury Secretary Steven Mnuchin included the meal deduction as a White House priority in negotiations. But critics said it would do little to help struggling restaurants and would largely benefit business executives who do not urgently need help at this time. – Zero Hedge
It is heartbreaking and enraging that they would dare to call this a relief bill for the “American people” when the people getting the most relief are the corporate executives who don’t actually need it.
If we look back at the first so-called stimulus bill, the unironically titled “CARES Act” we see the same corporate bailouts but hardly anything for small businesses and the American people, ProPublica reported:
Do you want to see how legislation that was supposed to be a bailout for our economy ended up committing almost as much taxpayer money to help a relative handful of the non-needy as it spent to help tens of millions of people in need? Then let’s step back and revisit parts of the Coronavirus Aid, Relief and Economic Security Act and look at some of the numbers involved.
The best-known feature of the CARES Act, as it’s known, is the cash grant of up to $1,200 per adult and $500 per child for households whose income was less than $99,000 for single taxpayers and $198,000 for couples. These grants are nontaxable, which makes them even more valuable. Some 159 million stimulus payments have gone out, according to the IRS.
But when I began looking at details of the legislation, I realized that several of its provisions quietly provided benefits that were worth much more than $1,200 to some upper-middle-class people who didn’t qualify for stimulus payments. Some other provisions provided vastly bigger benefits to the rich, to corporations and to a relative handful of ultra-rich folks.
So let me show you five provisions of the legislation that benefited the upper middle class (including yours truly); the families of Donald Trump and his son-in-law, Jared Kushner; high-income people who make large charitable donations; and Boeing and other corporations that are showing losses; as well as indirectly benefited people who have substantial investments in U.S. stocks.
These five provisions that help the well-heeled will cost the Treasury — which is to say, U.S. taxpayers — an estimated $257.95 billion for the 2020 calendar year. That’s nearly as much as the estimated $292.37 billion price tag for the stimulus grants to regular folks. The numbers are from Congress’ Joint Committee on Taxation, the official scorekeeper of the financial impact that legislation has on the Treasury. (I used those figures to calculate the spending for the 2020 calendar year rather than for 10 federal fiscal years because I’m interested in today’s impact, not the projected long-term impact.)
I’m writing this now, more than two months after the CARES Act took effect, as a cautionary tale. That’s because with massive unemployment upon us and the fall elections drawing near, there’s a temptation for Congress and Trump to produce legislation that will help needy people a bit but help the non-needy a lot more by doing things like reducing capital gains taxes.
Normally, people who itemize deductions on their federal tax return can deduct no more than 60% of their adjusted gross income for charitable contributions. But for this year, the limit is 100% of AGI.
The Tax Policy Center, whose research helped inform this article, estimates that about two-thirds of the people who donated more than 60% of their AGI in past years had incomes of less than $100,000. But although such people accounted for the bulk of those making such large contributions relative to their income, the TPC says, ‘Most of the value of the deduction goes to just a small number of the very wealthy.’
Now, we come to the huge item that benefits the likes of Trump and Kushner, their families, other wealthy real estate types, hedge fund investors and all sorts of ultra-high-income people, who derive large amounts of money from partnerships, LLCs and other so-called pass-through entities.
As you’ll see in a bit, this big-time break provides a big-time benefit to a relative handful of people. – ProPublica
I encourage people to actually read the rest of the article; it’s quite informative. Since President Trump took office, the mainstream media attacked him nonstop, one side effect of which has been that people now stay safely within their own comfortable echo chambers, reading only publications that align with their personal political views. This is no good and over time the public have become accustomed to the subtle imposition of strictures on free thought.
The powers that be exploit this trend and personally tailor propaganda for either side, that will confirm their biases, and keep each from talking to the other and thus forever hopelessly divided. It also prevents them from being exposed to certain facts that they don’t like, but nevertheless are still true.
Food Shortages and Trade Wars
The next thing we will look at is the coming food shortages that will, in my opinion, rival Venezuela as the dollar is purposely destroyed and the multi-polar world order comes into creation. This has long been planned, and we can see the new trade agreements will promote practices like regionalism and bi-lateral trade.
In November of 2020, CNBC reported on the ongoing trade war between Australia and China, looking at the insane tariffs China was imposing on wine:
Small exporters, grape growers and regional communities are going to feel the brunt of China’s decision to impose steep tariffs on Australian wine. That’s according to Tony Battaglene, chief executive of Australian Grape and Wine, the national association of grape and wine producers.
China’s commerce ministry on Friday announced preliminary anti-dumping duties ranging from 107% to 212% on Australian bottled wine imports, which went into effect the following day. That follows China’s anti-dumping probe into wine imports from Australia earlier this year.
‘It’s going to have a devastating impact,’ Battaglene said Monday on CNBC’s ‘Squawk Box Asia.’ He explained that larger Australian wine exporters who have diversified portfolios would likely be able to cope with China’s decision even though they, too, would feel the pain.
‘It’s grape growers, it’s regional communities and it’s small exporters that have very little ability to adjust. They’re the ones that are going to suffer,’ Battaglene said.
Getting into other markets on short notice is not easy as it takes time, relationships and money to develop those markets, he added.
China is the top wine export destination for Australia. It accounted for 39% of total exports for the 12 months ending September 2020, according to Wine Australia. – CNBC
China has been assiduously buying up all the food they can get their hands on, while at the same time imposing massive tariffs on other countries. China has been continuing to act like the bully that they are, largely because for years no one has held them accountable. The South China Morning Post, typically a propaganda arm of the CCP, reported on this trade dispute between Australia and China just last week:
Trade minister Simon Birmingham on Wednesday described Australia’s decision to appeal to the World Trade Organization (WTO) over China’s tariffs on Australian barley imports as the ‘logical and appropriate next step’.
After an 18-month investigation, China’s Ministry of Commerce ruled in May that Australian barley was being both undervalued and subsidised. This was followed by a combined
consisting of 73.6 per cent in anti-dumping duties and 6.9 per cent in anti-subsidy duties.
Birmingham confirmed on Wednesday that Australian officials had
in Geneva and their counterparts in Beijing that it will lodge requests for ‘formal consultations with China in relations to the application of anti-dumping and countervailing against the Australian barley industry’ later on Wednesday.
‘We have applied at every step of this journey all the appropriate processes, procedures and courtesies to the manner in which Australia and Australian industries have engaged with the Chinese government and their Chinese counterparts. This is the logical and appropriate next step for Australia to take,’ said Birmingham.
‘We are highly confident that based on the evidence, data and analysis that we have put together already, Australia has an incredibly strong case.’ – SCMP
As you can see, in addition to imposing over 200% tariffs on Australian wine, China then sought to impose over 80% tariffs on barley, causing Australia to seek a resolution via a WTO dispute.
Just two weeks ago, Yahoo News Finance reported that Canadian families are to pay nearly $700 more for groceries in 2021, indicating major hikes in food prices:
The average Canadian family will pay up to an extra $695 for food next year, as the pandemic, wildfires and changing consumer habits drive up grocery bills to the highest increase ever predicted by an annual food price report.
Rising bread, meat and vegetable prices are expected to lead the overall food price increase of three to five per cent, according to Canada’s Food Price Report 2021 released Tuesday.
For an average family of four, that means a $13,907 grocery bill.
‘We don’t expect a break at the grocery store any time soon,’ said Sylvain Charlebois, lead author and Dalhousie University professor of food distribution and policy.
‘This is the highest increase that we’ve ever expected.’
The 11th edition of the food price report, published annually by Dalhousie University and the University of Guelph, has expanded this year to include the University of Saskatchewan and the University of British Columbia, making it more national in scope.
Researchers said in the study that COVID-19 will continue impacting food prices next year, with the meat industry particularly vulnerable to potential labour shortages, logistics disruptions, food plant and distribution centre slowdowns and shifts in consumer demand.
While meat prices could increase as much as 6.5 per cent overall, the biggest price hike could be for poultry, a supply managed industry in Canada.
Poultry prices are up seven per cent since July, Charlebois said, adding that as production costs continue to rise, so will retail prices. – Yahoo News Finance
I have previously warned that the coming food shortages is part of the reason for the food price increases, together with crop losses and issues with meat processing plants during the lock downs. Zero Hedge recently published an article entitled “Why Albert Edwards is Staring to Panic about Souring Food Prices“ that looks into the commodities index and statistics:
Is it time to worry about food inflation?
The reason this has suddenly become a hot topic is because while overall inflation remains subdued (we will spare a discussion here of why the CPI is purposefully distorted to stay as low as possible – readers can catch up here, here and here), food inflation has been on a tear in recent months. In fact, it has gotten so high that earlier this week Goldman published a report looking at ‘The Recent Spike In Food Inflation’, in which it noted that ‘in recent months, inflation has risen and surprised to the upside across a number of major EM economies (e.g. Turkey, South Africa, India, Brazil andRussia).’ According to Goldman, ‘one of the main drivers of these increases has been higher food inflation, which has coincided with a sharp increase in the price of some key agricultural commodities (e.g. grains, oils and soybeans).’
As Edwards explains, for much of the past decade he – and other Fed skeptics – have railed about the distorting impact of QE on asset prices. And aside from capital markets where the Fed’s intervention has spawned a record wealth divide leading to unprecedented political and social polarization, perhaps the most disturbing episode of such distortion was the abovementioned explosion of food prices that began towards the end of 2010. According to Edwards, many economists – this website included – believe the Fed’s QE2 was the primary cause for the 2010-11 bubble in food prices which contributed to the social unrest and ensuing revolutions in many Arab countries.
This is a problem because in a time when central banks are injecting a record $1.4 billion in liquidity every hour, and when most economists’ attention is now focused on the impact of the Fed’s QE on buoyant equity and industrial commodity prices, Albert says that ‘we should also watch the unfolding surge in food prices very closely indeed – and with trepidation.’
The reason for that is again what happened in early 2011 in Tunisia: That event marked the start of a chain reaction of social unrest around the Middle East and elsewhere that toppled governments and became known as the Arab Spring, Edwards writes and adds that ‘although the narrative of these revolutions had its origins in longstanding grievances and a thirst for democracy, many economists identified rocketing global food prices from the end of 2010 as the trigger. (T’was always so: certainly, higher food prices contributed to both the French and Russian revolutions, and to the 1989 unrest in China.)’
As for whether central banks were responsible for these revolutionary dominoes, Edwards is a bit more nuanced, writing that while they certainly spawned much of the asset reflation observed in late 2010, ‘the truth is that central banks have no control over which financial bubbles will ultimately emerge as they spray QE into financial markets.’ It just so happens that food is one of them with alarming periodicity.
So going back to the facts, Edwards writes that ‘one thing you may have missed recently is that the UN’s Food and Agriculture Organization’s (FAO) widely followed food price index (the basket measures prices for oilseeds, dairy products, meat and sugar)’ which as shown above, has – once again – been surging over the last few months. As noted previously, the FAO food index rose for a sixth month running in November, on pace to hit a six-year high, with Edwards noting that ‘annual inflation in cereals reached 20%, the highest annual rise since mid-2011 when the Arab Spring was in full flow! (see chart below).’
Next, Edwards expands on the superficial Goldman analysis, and points out that the effect of higher food prices tends to be much greater for EM countries that are 1) large net importers of food, and 2) where households spend a greater percentage of their income on food (ie they have a much larger weighting of food in their CPI basket). – Zero Hedge
There are many factors that have contributed to this concern regarding the global food supply and we should be paying attention to what is going on at our local supermarkets. We know that the “powers that shouldn’t be” are also heavily promoting lab grown meat, with Singapore being the first to feature an entire restaurant with this abomination. Clean Meats Australia reports on the implications of this phenomena:
Advancements in biotechnology and gene editing tools like CRISPR are changing the agriculture industry for the better. While CRISPR is being used to produce better crops and sustainable beef, lab cultured meat is another promising alternative.
What does cultured meat mean? Does it taste the same? How is it different from regular meat? We’ll provide you with answers to all of these questions and more.
Lab-grown meat, or cultured meat, is produced through the cultivation of animal cells in vitro. Since lab-grown meats are grown from cells, it’s a solution to the ethical issues surrounding livestock agriculture. Cultured meat is produced in a controlled environment, free from bacteria and diseases.
Despite being grown in a lab, lab-grown meat is close to ‘real’ meat, as it is made from animal cells. Although cultured meats are not yet commercially available, research in ongoing on making these marketable in the next few years.
Lab grown meat is made by the controlled culture of animal cells. Scientists commonly grow cells in the lab, and this process is not too different. While the specifics behind how lab meat is grown in companies is proprietary, the basics behind it consists of keeping cells happy in a culture environment to promote their survival and continued growth.
Lab grown meat starts with animal cells, typically muscle or fat cells, or stem cells that are forced to differentiate into muscle cells. These cells are cultured using the appropriate growth medium that contains nutrients that promote its growth and survival. To aid in the growth of culture as it begins to expand, edible scaffolding is sometimes used. Finally, cells are allowed to divide and expand until ready to use, all the while being monitored consistently for harmful bacterial contamination.
A new wave of meatless meats are becoming more popular since coming to the market in the last few years, however it is important to distinguish that those are not the same as cultured meat. The meatless meats you might be familiar with are plant-based ‘meats’ and contain no animal tissue whatsoever, though can sometimes contain animal byproducts like eggs.
The ingredients listed in a lab meat hamburger would be ‘ground beef’ while common ingredients in a plant-based burger made famous by companies like Impossible Foods or Beyond Meat include soy, beans, tofu, vegetables, grains, mushrooms, and other non-meat products.
Cultured meat is not synonymous with vegetarian or vegan-safe foods, as it contains animal cells. While lab cultured meats are not vegetarian, they provide a more friendly alternative for those who choose to refrain from eating meat because of animal cruelty or environmental reasons. – Clean Meats Australia
This article makes clear that subtle incremental advances in this direction have been occurring since 1998, with the powers that be shepherding the conditions that will bring about their imposition on us. They promoted these lockdowns in order to destroy small businesses, including farms, because they want a global food shortage. This is all about getting rid of animal agriculture. They have alluded to this in their own white papers going back years.
The final issue I want to tackle in this article is the problem with simply printing money, ad infinitum. Contributing directly to the devaluation of the U.S. Dollar, arbitrarily printing money has caused our nation to amass over $27 TRILLION dollars in debt that we will never be able to pay back. Just last month, Zero Hedge reported that Central Banks will add liquidity worth 0.66% of global GDP on average, every month in 2021:
Earlier today we explained why Morgan Stanley’s chief equity strategist Michael Wilson voiced concerns about the continuation of the ‘overcooked’ equity rally, expecting a drawdown into year end for the simple reason that ‘both fiscal and now monetary policy have become reactive rather than proactive. For markets, that becomes the itch that needs to be scratched–i.e. market pressure is necessary and likely to get Congress and/or the Fed to act.’
And yet, once the coming period of volatility is over, Morgan Stanley sees the bull market continuing with the S&P expected to rise another 10% over the next 12 months.
Why? The answer is simple, and is the same one explaining the market’s rally over the past decade: the unprecedented liquidity injection by central banks since 2009.
As Morgan Stanley’s chief rates strategist Matthew Hornbach wrote in a note this morning, while conceding that ‘unforeseen obstacles to a buoyant risk environment will arise’ he said that ‘current central bank policies are aimed at softening those blows, and will be effective at doing so.’ Indeed, as Hornback predicts, ‘not only will central bank balance sheets continue to expand’, with the Morgan Stanley strategist expecting G4 central bank balance sheets to hit just why of $30 trillion in two years, up from $25 trillion currently.
An important feature of 2021 will be the liquidity underlying economic growth. Why is liquidity important to macro markets? It both greases the wheels of transactional finance and changes the opportunity set available to investors. When it comes to liquidity, our focus is on both ‘narrow’ and ‘broad’ measures, as defined by Goodfriend (2000). And we expect both types of liquidity to expand in 2021.
Liquidity will come from continued central bank QE…
Central bank purchases of private sector assets (government bonds, corporate bonds, agency MBS) feature heavily in both types of liquidity injection. Exhibit 7 shows our monthly QE projections for the 8 central banks we think will be active in 2021.
We expect these 8 combined to remove US$304 billion of securities ($238 billion of which will be government bonds), on average, from private markets every month in 2021. Unsurprisingly, the Fed and the ECB will remove the most securities each month, in US dollar terms.
While these are staggering numbers, consider that the IIF now sees total global debt rising from $277 trillion at the end of 2020 to a grotesque $360 trillion by 2030, over $85 trillion from current levels. – Zero Hedge
It doesn’t take a financial expert or genius to figure out that these numbers are not sustainable. This is a centrally planned economy, NO DIFFERENT from any corrupt communist system, and this constant central bank intervention causes investors to lose confidence in the U.S. Dollar, clearly the goal. Seeking Alpha reported and predicted in October of this year that hyperinflation is coming:
Definition: Hyperinflation is the condition whereby monetary authorities accelerate the expansion of the quantity of money to the point where it proves impossible for them to regain control.
It ends when the state’s fiat currency is finally worthless. It is an evolving crisis, not just a climactic event.
This article defines hyperinflation in simple terms, making it clear that most, if not all, governments have already committed their unbacked currencies to destruction by hyperinflation. The evidence is now becoming plain to see.
The phenomenon is driven by the excess of government spending over tax receipts, which has already spiralled out of control in the US and elsewhere. The first round of the coronavirus has only served to make the problem more obvious to those who had already understood that the expansionary phase of the bank credit cycle was coming to an end, and by combining with the economic consequences of the trade tariff war between China and America, we are condemned to a repeat of the conditions that led to the Wall Street crash of 1929-32.
For economic historians, these should be statements of the obvious. The fact is that the tax base, which is quantified by GDP, when measured by the true rate of the dollar’s loss of purchasing power and confirmed by the accelerated rate of increase in broad money over the last ten years has been declining sharply in real terms while government spending commitments continue to rise.
In this article, it is documented for the dollar, but the same hyperinflationary dynamics affect nearly all other fiat currencies.
To understand why hyperinflation is already with us is to know what constitutes hyperinflation. It is not rising prices, or a condition that exists when prices increase above a predetermined rate: rising prices are the consequence of both inflation and hyperinflation. As Milton Friedman put it, inflation is always and everywhere a monetary phenomenon, though he spoiled it by continuing, ‘…in the sense it is and can be produced only by a more rapid increase in the quantity of money than in output.’ [i] He was wrong on that last bit, conflating the price effect with the increase in the quantity of money. When even so-called monetarists are imprecise about inflation, let alone hyperinflation, it is hardly surprising public confusion is widespread.
There can only be one definition of hyperinflation, and that is the one headlined above, which you won’t find in any textbook. There is even no definition of it in von Mises’s Human Action, only of inflation, and that is more a description than a definition. And since it is a relatively recent phenomenon of unbacked fiat currencies, hyperinflation was never defined separately from inflation by classical economists. The difference between inflation and hyperinflation cannot be distinguished by degree either.
The progression of annualised monetary inflation from under 6% before the Lehman crisis, to 9.6% subsequently until March this year, and 65% in the thirty weeks since is clear from the chart. If the monetary authorities have the knowledge, the mandate, the authority, the ability and the desire to stop inflating the currency, we would not describe it as hyperinflation, instead deeming it to be no more than a brief period of exceptional inflation before a return to sound money policies.
But sound money was emphatically discarded in 1971, when the post-war Bretton Woods agreement was finally abandoned – not that the monetary regime at that time was in any way sounder than Adam’s fig leaf was an item of clothing. For the fact of the matter is that sound money in America was arguably abandoned long ago, with the founding of the Fed at Jekyll Island before the First World War.
As a means of funding government deficits, inflation is capable of being stopped by cutting government spending and/or raising taxes. But, now, a one-off increase of 65% of narrow money is to be followed by another massive expansion already in the wings. The hope is that that will be enough, just as the original 65% increase in M1 was hoped to be enough to ensure a V-shaped recession would be followed by a return to normality.
The early stages of a hyperinflation are always seen by the monetary authorities as the only policy to pursue. They convince themselves that there are either no consequences, or that they can be controlled. An example of the genre is found in a paper by Michael T Kiley, a senior Fed economist.[ii] In August, he concluded that the lack of further room to cut interest rates to deal with the coronavirus requires quantitative easing to a total of 30% of GDP, or $6.5 trillion, to offset the lack of room for manoeuvre on interest rates. Kiley writes that about $3 trillion had been enacted between end-February and end-June, leaving a further $3.5 trillion to come. If we assume the full $6.5 trillion stimulus is enacted by next February, then the increase reflected in narrow money could be to more than double it.
Kiley wrote his paper before the second coronavirus wave commenced. He was modelling an economic contraction measured in real GDP of just 10% in the second quarter (actually 9.5% – not to be confused with the annualised rate reported at 32.9%). But, as I pointed out in last week’s article, with monetary inflation running at such a rate, a dollar last February is not the same as an inflated dollar next February, being diluted on Kiley’s figures by $6.5 trillion. The consequence is some extremely damaging intertemporal shifts, as described in the Cantillon effect, whereby ultimately both productive workers and the poorest in society lose savings, salaries and social security benefits through loss of the dollar’s purchasing power for the benefit of the government, its agencies, and big business. – Seeking Alpha
I highly recommend everyone go and read the rest of the Seeking Alpha article. They are a constant for me, in my own financial analysis and I check their website at least twice a month for no-nonsense financial news. To summarize the piece in layman’s terms, what the central banks are doing now will inevitably cause hyperinflation, which according to the article is already here now. The central banks have now meddled to a degree that the market doesn’t in any way resemble reality. By intervening and adding liquidity, they are making it impossible to determine the actual state of affairs of the finances of the American people. Because of the lockdowns, businesses have been prevented from operating while the banks continue to print money. This causes the GDP to be inflated by the increase in the money supply. This then causes an erosion of the U.S. Dollar’s purchasing power. The central bank has been deliberately reducing the value of the U.S. Dollar for decades, and trying to cover it up.
The above image shows how this has been systematically done. It was not a mistake, nor was it done accidentally. This is why hyperinflation is perhaps unavoidable at this point. The cost of living has continued to rise, while the value of the dollar has declined. Wages have remained stagnant while government liabilities and expenditures continue to climb. This is a house of cards. This is the sort of thing we see in socialist governments when things start to get bad. Think Venezuela.
I understand that this article is sort of long and tedious. I believe it is important that I share my forecast and thoughts about the coming year with our readers so that they may prepare. We know that a grand solar minimum is coming and the elites are aware of this and setting up the climate change narrative so they can make green and “sustainable” investments their next ponzi scheme and scam. These things like windmills don’t really work. The climate is indeed changing as part of an historical cycle. The grand solar minimum will cause the weather to get colder and as a result we will see more crop losses.
We’ve known for decades that China and Russia and some others are the enemy, but seldom reduce the clash in raw terms. Here we have a world moving rapidly towards that clash in realities we have never before seen so clearly. The goal of the enemies of free people is to destroy the United States of America in order to subjugate us so their globalist plan can proceed. With our Constitution, We The People are the only holdout.
Currently we see incremental moves toward their final goal. Partnering with the world’s globalists and after we’re neutered, the WIDER goal is to depopulate the world via disease, artificial scarcity and outright euthanasia. A topic for another article.
Food prices will continue to go up, as the supply chain suffers disruptions and the effects of the lockdowns continue to be felt. Both of the so-called “stimulus” bills were in fact mostly corporate bailouts and they are not enough to help struggling Americans who are currently losing everything. All of these things are converging, along with the vaccines and insane tyrannical mandates being imposed on people around the world, that is contributing to social unrest. These conditions form a powder keg that could explode at any moment. We will continue to see trade and food wars, as the elites push to bring forth the multi-polar world order. The west is being setup as the boogeyman to take the blame as the fall guy. Meantime, the elites move forward with the Belt and Road projects, and the build-up of the Pan-Eurasian superstate. China and Russia are working together to undermine the Petrodollar system and Israel is vying to be a high-tech superpower.
Learn how to garden, make sure you have a bug-out location and plan in place. Try to find local people in your area with whom you can possibly trade good and services. Stay grounded in the Lord and read the Bible. It is healing and provides wisdom. Diversify your investments and look into foreign markets. Invest in businesses that are not part of the new world order and that are trying to provide real solutions. Make sure you have taken a self-defense class and maybe learn a trade as college degrees become useless. There are many people with bachelor’s degrees who cannot find employment. Learn something like blacksmithing or electrician work. Try to become more self-sufficient and less wasteful.
Let the Lord be your guide in the months ahead. Stay grounded in Christ and you will be fine, no matter what happens.