My troll-level response to any “no inflation” expert
I think for awhile I might just post this video in the comments section of anyone who argues there is no inflation because the government statistics say so. The last was Rickards on Stansbury Research (Cambone’s interview program), who very recently argued that first we have to agree on a definition of “inflation” or we’ll just talk past each other. He then defined inflation as what the government measures; and then observed that by that definition there simply is no inflation. None. Whatsoever. End of discussion.
I don’t know if he failed to see the tautology, or if he hoped viewers wouldn’t. Whichever is irrelevant; I lost total respect for him, as he revealed himself merely a latter-day shill. Here, by happy contrast, is Dominic Frisby, British author, comedian, actor, blogger, and co-host of their program “Money Pit,” clearly articulating my perspective on the charade:
I saw that interview with Rickards, pretty bad. The government hides inflation by two main methods; Hedonic revision and substitution.
Originally, the government measured consumer inflation by taking a basket of consumer goods; x pounds of beef, x gallons of gasoline, x number of oranges, electronics etc, etc and comparing that basket of goods to the same basket the next year. The difference in price represented the inflation rate.
When inflation started to become a problem they simply changed the way they calculate it. One of the methods is called “substitution”; If beef prices get to high the government argues that people dont buy it anymore and are buying chicken instead. Therefore they “substitute” chicken for beef in the new basket. Likewise, if oranges get to high they argue that people are buying apples now. Never mind that the reason they are buying chicken instead of beef, or apples instead of oranges is because of inflation.
If chicken becomes too expensive and, in desperate need of protein, we all begin eating dog food, the government will be happy to substitute dog food for chicken and report no inflation.
The next “slight of hand” method that the government employs to hide inflation is called “hedonic revision”. Thats a fancy way of saying that even though the price of something has gone up, we judge the product to be better so therefore the value is the same [ and “poof” no inflation ]. So you could buy a car in 2000 for 12k. Today the same car costs 20k. Well your new car has onstar, sirius radio, and voice command climate control so you have received a higher value and therefore no inflation. This is, of course, extremely subjective and the consumer may not want or need those features.
I made a post the other day about how the government has destroyed all the gauges by which we can measure economic reality. The debt ceiling, CPI, GDP, gold prices, other currencies, etc. All of these have been altered and sabotaged to disguise reality. They even sued Standard & Poor’s when they downgraded the US’s debt. The CEO resigned, and Moody’s immediately rolled over and gave US debt a AAA rating. It all rigged.
There are two things that can make the price of things go up;
1 – Scarcity, the real kind not the engineered kind. If there are any constraints on the supply of anything there is less of it but with the demand for it still there. That means that it can be sold for a higher price. This is happening in many many parts of the economy. With Peak Everything we can expect more of this. This is called resource constraint and is not inflation.
2 – Increase in money supply in relationship to anything. If the supply of something remains solid or even increases a bit while at the same time the population starts to have more and more money to spend then the price can go up and up and people can still keep buying. The key here is that everyone, or at least the majority of those in the market for anything must be constantly getting more and more money… wheelbarrows full. There are many parts of the economy where this is happening but only in the parts of the economy where people are getting more and more money. This is inflation. It is and will always be a monetary thing.
Before the “Pandemic” 80% of the American public was living paycheck to paycheck and could not pull $500 together if they had to. After more than a year with the economy virtually slammed shut for most, half the population behind in mortgage, rent, credit card debt. There is ZERO inflation happening for them even if they got a check for $600 last year and $1400 this year.
There is inflation for around 10% of the population, diddly squat for about 80%, and maybe some crossover inflation here and there for the other 10%.
You can have both 1 and 2 happening at the same time and it is in some areas but unless the average American starts having tens of thousands of dollars left over after expenses and debt payment, which I see no possibility of happening, then no inflation but more and more scarcity is baked in.
I don’t remember the Gov’t suggesting that the inflation rate is at 0.
“Last month, the Federal Reserve projected inflation will hit 2.4% this year, up from an earlier estimate of 1.8%, though the Federal Reserve is expected to keep its benchmark interest rate at or near zero through 2023.”
Maybe Rickards was talking about the Feds benchmark interest rates.
I was pretty surprised by Rickard’s interview, and the way he talked about inflation. It seemed like he has changed his tune.
His approach (going along with the government measure / definition) is fine as long as one critically examines what the government is doing. But there was no criticism. This was one of the least impressive Rickard’s interviews I have seen in a while.
I get the feeling they include all of those new features many products have without accounting for the fact that many (especially appliances and electronics) don’t last as long as they used to. That should be reverse hedonics.
The one exception should be cars many of which tend to last longer and require less maintenance than they used too.
So lets see how this plays out.
FRIDAY, APR 16, 2021 – 07:46 AM
With crypto prices trading at record highs….Turkey… decided to crack down on the use of virtual currencies in desperate hopes of preserving confidence in the Turkish lira, the world’s worst performing ….currency.
Bitcoin [price] dropped as much as 4.6% on Friday as Turkey banned its use for payment.
The curbs also prohibit Turkish companies that handle payments and electronic fund transfers from processing transactions involving cryptocurrency platforms, essentially cutting off legions of Turkish retail traders – who have been finding respite in crypto from their increasingly worthless domestic fiat currency – from the country’s banking system.
In an ironic explanation, they explained that Turkish citizens should stick with their devaluing lira to avoid the “significant risks” of digital tokens!
As for why, the central bank cited a lack of regulation, supervision mechanisms or central regulatory authority, combined with the potential for criminal activity and the high volatility of their market value, mean digital tokens entail “significant risks.”
I see no benign explanation. He’s been a sleeper cell into the PM community all along and now he’s been activated amidst the Silver squeeze and unmistakable signs of real, hot inflation.
It was only a matter of time before this happened.
The 21st century has so far been about “control over the citizenry.”
Bitcoin is the antithesis of this.
Moreover, traditional fiat regimes are proving to be unsustainable – in part, due to diminishing resources colliding with overpopulation. Like all failing regimes throughout recorded history, the powers-that-be believed that they could address the problem by simply debasing the currency.
Bitcoin prevents that tactic.
Thus, the animosity towards Bitcoin and all crypto by the PTB.
Turkey has fired the first shot in the war against systemic reform. But I guarantee you that it will not be the last.
As you say, it will be interesting to see how this plays out.
SP, I wonder how effective such a ban can be. Turkey “banned its use for payment”, but you can still buy and sell it.
The term “payment” is a little fuzzy to me. Lets suppose I grow potatoes in my backyard and you milk a cow. I need milk and you need potatoes so we agree on a fair trade. Your milk for my potatoes, right?
Who is paying who? Who is the buyer and who is the seller? Who is the “customer” and who is the business? All transactions are really just even trades….your labor for my dollars. Your product for my bitcoin. Your timber for my gold, etc,etc. Thats why commerce is also called “trade”. When a person learns a marketable skill its known as a “trade”.
Maybe Im veering off topic here but the problem that I see in this situation is that local “trade” has been largely supplanted by regulated “payment processing” configurations that have blurred the basic heart of the transaction. You’re trading dollars, so you’re in this category….Im trading potatoes so Im in another category. Its very convoluted when you think about it. There should be no such thing as a “customer”, no “payer”, and no “business”, no “retail”, “wholesale” or any of it.
All transactions are a form of barter and “trade”. One thing for another. What those things are doesnt matter. Until we strike at the root of the issue, we’re going to keep circling back to these same problems whether its bitcoin, gold, dollars, potatoes or whatever.