It’s been a month since we last looked at inflation here at Sector 8.
The government has been creating too many dollars. In December of 2020, one third of all dollars that had ever existed had been printed in the past ten months.
It appears as though the Federal government was just getting started. Six months later in May 2021, it was said that 40% of every dollar that has ever existed was created in the preceding 12 months.
Another 5 months later, that had increased to 80 percent of all dollars that have ever existed were printed in the past 22 months.
This is a cycle that causes hyperinflation: Printing more money causes that money to become less valuable. To counter this, more money is printed, which causes it to become less valuable. Wash. Rinse. Repeat.
In fact, the Fed printed an average of $27 billion per day in 2020 and put those dollars into circulation.
In 2021, the Fed increased that rate to nearly double that. Of course, most money today isn’t physically printed. It exists only in the electronic minds of computer systems. That’s because no one could physically print that many bank notes.
This out of control creation of money is warping the entire economy. Excluding food and energy, consumer expenses are up 4.9 percent from a year ago. This is the largest increase in 40 years.
According to a friend of mine who works in the banking industry, the Fed governors were recently polled on where they see the Federal funds rate going in the next 24 months. The average was 2 percent.
A two percent increase is a big deal. It also isn’t enough. The greatest impact that higher interest rates will have is on the largest borrower in the world — the United States government. The United States national debt is nearly 30 trillion dollars, which it finances through Treasury bills, notes and bonds. The public holds 80 percent of this debt, which requires direct interest payments, rather than ledger transfers on the Treasury books.
The fiscal year 2021 United States budget included over $562 billion spent paying interest on the federal debt. To put this into perspective, the cumulative net worth of the five wealthiest people in the US (Jeff Bezos, Elon Musk, Bill Gates, Mark Zuckerberg and Warren Buffet) was $465 billion. So, the interest paid on the debt in 2021 is more than these five people’s net worth COMBINED.
An increase in those interest rates will cost the government a lot of money. Money that they do not have. Any increase in interest rates will add hundreds of billions of dollars of interest to the federal budget. In fact, a one percent increase in interest rates means an extra $300 billion in interest on our national debt.
The only way for the government to pay the higher interest is- you guessed it- to print the money, which will cause the currency to be devalued, and worsen inflation, which will again cause higher interest rates. Wash. Rinse. Repeat.
We are riding this sinking ship all the way to the bottom.
Toastrider · January 28, 2022 at 10:34 am
A tangential, but relevant thing:
Recently, Fox News had one of the mods for the reddit ‘antiwork’ on. It was a hilarious dumpster fire, as you might expect.
One of the big talking points about antiwork is how people seem to be trapped in dead end jobs, working harder and harder for less pay. They attribute this to corporate greed and malice.
However, if you look at it from the inflation angle, suddenly things snap into focus. The problem isn’t corporate greed. The problem is that the paychecks have become devalued to a ridiculous extent. In other words, you’re working as hard as you were or harder, but the yields are diminishing because of the reduced purchasing power of the dollar.
This will not end well.
Steve S · January 28, 2022 at 10:37 am
The M1 charts show the huge spike from when M1 was redefined to include Money Market funds, so if you back that out it’s not as bad as the headlines say. Bad enough though.
Brutus · January 28, 2022 at 11:07 am
There are other measures of money which seem closer to reality. https://fred.stlouisfed.org/series/MBCURRCIR
History Repeats · January 28, 2022 at 12:21 pm
A private banking cartel that is not federal or a reserve will finish off what is left of the republic and the BRICS are still going as well.
I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world — no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.
Big Ruckus D · January 28, 2022 at 2:01 pm
The above quoted revelation of woodrow wilson is remarkable, though I’ve read it before on multiple occasions. I’d really like to ask him why, if he was prescient enough to say that in hindsight, he wasn’t smart enough to not fuck it all up to begin with. After all, he was in the seat of power when the federal reserve act was passed, amongst other leftist hallmarks.
He sounds much like a branch covidian of 2022 who is presently realizing they backed the wrong horse, and has begun trying frantically to scrub their public image and reputation of the mortal sins they comitted in service to leviathan. No, bitches, you aren’t getting off that easy.
NA · January 28, 2022 at 8:29 pm
It seems to be a mashup of two different quotes.
See (“…we have come to be one of the worst ruled…”):
Big Ruckus D · January 28, 2022 at 8:40 pm
Like so many other quotes badied about online, misattribution is a pitfall. If old invalid woody, whose wife became HBIC after his departure from competency, never said that which was ascribed to him above, then I guess there’s no need for me to wonder why hie did what he did. I mean, we all know he was a leftist asshole.
Anonymous · January 29, 2022 at 12:08 am
Hyperinflation will disrupt the tax collection system, which will cause the welfare and social security recipients to get jobs, and end servicing of the national debt, which will ruin the national credit rating. After that government will not be able to employ thugs to threaten you with guns if you fill a mud puddle, evict a fish, and build a factory there. What is sinking is government; not sinking are people and their skills, nor farms, factories, mines, or fossil fuels. If you can sell the future revenue stream of your government pensions to someone, turn the proceeds into gold coins and hide them.
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