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Transitory Inflation

A billionaire hedge fund manager is contradicting the Fed’s claim that the high inflation we are seeing now is “transitory.”

The central bank in August 2020 tweaked its policy, saying it would allow inflation to run “moderately” above 2% “for some time” in order to help the central bank meet its goal of full employment. The problem here isn’t that the economy is preventing full employment. There are jobs, business wants to hire. It’s just that the money being dumped into the economy by the Federal Reserve and the Federal Government are allowing people to sit at home without working.

It is only a matter of time before the Reserve Banks have to acknowledge what all of us already know- inflation has massively taken off. Once the FR makes it official, the market will tank, the bond market will go sour, and interest rates on the debt will soar. That will force the government to devalue the dollar in order to be able to afford the interest payments on our $30 trillion (give or take) debt.

Our rate of borrowing is already incredible. We have increased the National Debt by $6 trillion in the past two years. Since September of 2016, we have borrowed $9 trillion. It took our nation from its inception all the way to 2007 (231 years) to borrow $9 trillion. Since 2007, we have borrowed another $19 trillion.

Our debt is so large that a one percent increase in interest rates represents almost $350 billion in extra interest that must be paid. An interest rate that increases by just 3 percent will leave no money in the budget for anything else, not even Social Security.

Every President and Congress for the past 80 years has kicked this can down the road.

Trump increased the National Debt by 141% from $19.6 to $27.7 trillion in four years.

President Obama increased the debt by 185%- to $19.57 Trillion.

President George W Bush borrowed $5 trillion in 8 years, increasing the national debt by 187%.

It took President Clinton 3 and a half years to borrow his first trillion dollars. All told, he borrowed $1.2 trillion in his first term, and $600 billion in his second. He increased the national debt by 140% in eight years.

George HW Bush borrowed his first trillion in 3 years, and he increased the National debt by 170% in four years.

Reagan borrowed his first trillion in 6 years, and doubled the National debt during his eight years in the White House.

Carter increased the National debt by 150%, but “only” borrowed $300 billion in 4 years. I guess that was when $1 billion was real money.

Ford increased the debt by 147% in 3 years., Nixon by 135% in 5 years, Johnson by 116% in 6 years, Kennedy by 106% in 2 years, Eisenhower by 108% in eight years.

Biden may well be the President who is left holding the bag.

5 replies on “Transitory Inflation”

America is destroying herself. The only viable option I see is for conservative states to secede. Just as a drowning person will kill a rescuer trying to climb out of the water, the communist states are killing the rest of the states. This situation is far beyond stopping and will get violent soon. And, no, the riots by the fascists are nothing in comparison to what’s coming.

it’s not just the gov…Americans in general have a ton of debt on their own…we are charge it society…we want it here and now, who cares how we pay for it…and yes, what’s coming will be far from pretty…

As a “real money” guy, I need to point out this entire fiasco is caused by two things: the creation of the Federal Reserve banks and getting rid of the gold standard.

Of course we created more money between 2007 and now than from 1776 to 2007, for two obvious reasons. First, the goal of the Fed to always have inflation means the money has been devalued so every year needs more dollars to buy the same stuff. Second, the Marginal Utility Function formalizes that each additional dollar has less effect.

This is following along the lines predicted by James Rickards in “The Death of Money”. With lots of time in waiting rooms lately, I’ve been re-reading parts of that. Although written in 2014, so it doesn’t use the term, I read things in it and say, “hey, that sounds like the Great Reset”. They’re crashing the dollar to prepare for the new world order

“hey, that sounds like the Great Reset”. They’re crashing the dollar to prepare for the new world order

Shhh, don’t tell anyone about the secret libertarian plan. Once the dollar is hyperinflated, the ability to easily collect tax goes away, which means government employees can no longer be easily paid a salary in a form useful to them. An organization as big as a modern government or army can’t be run on barter or by paying troops directly with items seized. An army can’t live off the land in the suburbs.

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