IT’S ONLY 34%

What will be the mood of the people when food prices rise 100% at regular intervals and real hunger sets in? Food riots will become a reason to burn everything down. The price to buy food storage today will look cheap down the road.

Deflation is when prices are falling.

Read this comment if you want me to dispel your misunderstanding of inflation and deflation. In my arrogance I think this should be a post unto itself. My blog is a ghost town, so I make this comment for the catharsis.

There is no such thing as a constant generic unit of wealth. We cannot properly measuring ‘overall prices’. We can only make estimates, and we know how the government lies more and more on their ‘statistics’. Because there are money units but no general wealth units, we can’t measure how many wealth units a dollar (a fiat money unit) is worth over time. The best we can do for overall prices is consider proportions of money to wealth. Yes, I know gold can be both, but I set that aside to discuss our current predicament with enemy-issued fiat money. The best we can do is suppose in theory that changes to the overall pricing within an economy depend on the change in the proportion between money supply (i.e. money base) and wealth supply (essentially GDP or better yet GNP, but we don’t count since 1987, if I recall correctly, see the online glossary of BEA).

This is how the best-we-can-do-on-inflation theory works. Prices at time one are effectively the proportion of money to wealth at time one. A year later at time two prices are effectively the proportion of money to wealth at time two. Yes, there can me manias of tulip bulbs, but then other goods and services must cost less. The supply of money can go up, go down, or stay the same. If government were honest and used fiat money, the supply of fiat money would be held constant or even decreased. The supply of wealth can go up, go down, or stay the same. We have 3**2=9 possibilities.

Suppose the supply of wealth doubles and the supply of money stays the same. We would by proportional expectations expect that overall prices would drop to half of what they were. Suppose the supply of money is halved and the supply of wealth stays the same. We would again by proportions expect that overall prices would halve. The decrease in prices caused by the increase of wealth is called real deflation. The decrease in prices caused by the decrease of money supply is called apparent deflation. Similarly, the increase in prices caused by the decrease of the wealth supply is called real inflation, and the increase in prices caused by the increase of money supply is called apparent inflation.

Where I want to correct you, as applicable, is in measuring inflation/deflation with the net change in prices. That is completely wrong. The inflation/deflation caused by the independent variables proportional change of wealth supply to itself and of money supply to itself in an economy are essentially one-dimensional vector math. To wit, positive acceleration is the same thing as negative deceleration. The net change in prices is a function of the change of wealth supply and iof money supply.

Suppose ‘Americans’ work hard and increase the wealth of the U.S. economy by 10 percent and suppose the Fed increases the money base by 10 percent. We would expect that overall prices would remain the same. We might say that the overall baseline of prices remained the same because prices can be perturbed by changes in the use of credit for economic transactions, but let’s keep it simple for the basic idea I want to communicate.

If the Fed requires a Goldilocks inflation of two percent annually, they must not only increase the supply of money as fast as workers increase the wealth supply just to break even in overall prices (so net overall prices don’t go down as they naturally would) but must also add more money to push prices up further past the previous overall pricing level by two percent. Thus, the U.S. establishment has not merely confiscated a tiny amount of wealth proportional to the two percent NET inflation. They have confiscated ALL ECONOMIC GROWTH IN THE ECONOMY PLUS AN ADDITIONAL AMOUNT WHICH CORRESPONDS TO THE TWO PERCENT NET INFLATION.

According to this theory, the only way an honest producer can get ahead (net economic gain) is to push other honest producers down with an offsetting net economic loss not only to his personal gain in affluence but also to pay off the government gain in affluence. The government confiscation makes the non-command part of the economy a negative sum contest, which is even worse than a zero-sum contest. The command economy must grow endlessly to create the NET price inflation necessary to make the unwinding of bank loans profitable.

Positive interest on money in a net deflationary environment is not viable. Money that sits around becomes more valuable during net deflation, so things become more affordable by being an earner and saver. No one wants to borrow less valuable dollars today to pay back more valuable dollars tomorrow unless the math works out in their favor as borrowers, which (subject to some variability in a potential borrower’s economic prospects for future earnings) requires negative interest rates from lenders.

Lenders would NEVER lend to regular people at negative interest rates because negative interest rates only occur if lenders are desperate to preserve any of their current purchasing power. Negative interest rates on U.S. Treasuries a possible because only government can plausibly ‘guarantee’ preservation of current purchasing power with future taxation and sovereign extortion.

If the wealth supply is shrinking, the government cannot target two percent NET inflation because they win from their apparent inflation not from real deflation, which hurts everyone (socialized costs of a police state). They government want to cover their socialized losses of real inflation with apparent inflation and take even more with more apparent inflation.

If you understand the proportional theory (as I have deduced it and presume competent economists understand), you understand that we have been robbed not only from prices going up but from prices not going down after we have earned it. The cost of regulations and lost opportunities I can’t suppose to characterize. If prices go down because of wealth expansion, everyone benefits. If prices go up because of money supply expansion (i.e. apparent inflation, which is a better definition of ‘inflation’ than net price inflation), only the establishment and their eventually expendable useful idiots benefit. If the moral universalists were what they say they are and if they were not too stupid to understand basic economics, they would condemn increases in the supply of fiat money with the vigor they give to their primary objections, but they don’t.

The “brainless black lesbian diversity hire PR nitwit,”…