In the past, David and I have written about how money supply is rampantly expanding, and how this benefits the spenders and the speculators while punishing the producers and the savers (in a relative sense of course). We’ve been called conspiracy theorists for pointing out systematic problems with paper currencies.
Today in The Australian we find some more people who agree with us: Rupert Murdoch, Veteran Reserve Bank economist Peter Jonson, Warwick McKibbin (former Reserve Bank Board), and Bob Gregory (Professor of economics at ANU and another former Reserve Bank Board member). It’s good to see this issue make the front page. Shame it wasn’t there 15 years ago.
“Rupert Murdoch had warned G20 finance ministers that money printing by central banks had exacerbated inequality…”
“Mr Murdoch is saying what a lot of people including central bankers are saying in private and increasingly in public,” said Warwick McKibbin
Here’s the latest US money base* graph. The massive injections started in August 2008, the numbers ran right off the old graph scale. It was a temporary liquidity injection to tide us over difficult times. It took 90 years to grow the US base money to $800 billion. Now six years later [...]
From Australia Christmas Cards to Europe and the US were $1.60 last year. In 2013 it’s $2.55. I have never seen a rise like it. Back in 2000, it was just 80c each card. Normally postage stamp prices creep up with inflation. The fit is so good, historians often track inflation through stamp prices — see here for Germany in 1923. When I wanted a monotonic rising line to “correlate” with temperatures, US stamp prices were the obvious first choice. To give you some idea of just how well stamps and inflation go together, consider that US post is contemplating raising prices faster than inflation, and that is so unthinkable it made the news in the Wall St Journal last month. But here in Australia, this monster leap has appeared virtually without a comment…
2010 stamp compared to 2013
Joint Post: David Evans and Jo Nova Robert Wenzel says to Federal Reserve: “Leave the Building to the Four-Legged Rats”
Finally a speech with attitude tells it like it is, at the US Federal Reserve. The speech was given by blogger Robert Wenzel in late April to the New York Federal Reserve Bank, because they invited him to speak. It deserves a read — a man who knows the details tallies up the score, and politely lays out the contradictions of the Federal Reserve at point blank range.
But it is much more than that. For the US Federal Reserve to invite Wenzel to explain Austrian economics to them is like “the team” in Australia inviting me along for lunch at the Department of Climate Change to explain why the CO2 theory ain’t too hot. If that happened (as if), what would I say? This is the nature of the choice that Wenzel faced. A slam-dunk, in the nicest possible way.
The convergence of common sense: Austrians are the skeptics of economics
Wenzel is an Austrian economist, which is like being a climate skeptic in climate change. In the 1930s, Keynesian economics took over from classical economics among the central [...]
The game is up when everyone knows the only way out is printing money, because then everyone knows inflation is coming, and the bun-fight begins. Everyone wants the wage rise, the payment now, and to buy the commodities that they won’t be able to afford tomorrow. Price tags begin that rising spiral. I don’t think we are on the verge just yet, but it can’t be that far when someone like Murdoch is broadcasting it.
Rupert Murdoch tweets:
Governments worldwide have borrowed 100 trillion last ten years. Defaults inevitable sometime soon. Means crash, hurting rich and poor.
@rupertmurdoch Of course markets stay high with central banks printing huge sums, inflating everything except jobs.
The only question that matters then, is are they “printing”, and how long have we got?
US Money Base Figures
This is the US money base, starting in 1918.
You can see the moment Lehman Brothers went under. It’s that “bend”.
That graph again, logarithmically, so we can put the last 90 years in perspective. Remember the oil crisis, the Vietnam War, the 1987 crash, LTCM, and the dot com burst? They don’t rate.
Ladies and gentlemen, it’s obvious (to anyone who knows there’s no free lunch) that one way or another this Festival of Funny Money was going to end in tears. And so it flows… but let’s not forget what lead us to this, the problem that lies under all others.
The government can print (base) money from nothing, and they can set interest rates artificially low so as to encourage private banks to create (bank) money from nothing. And governments keep doing it, because it’s so much easier to be elected handing out loaves and fishes, and grants and solar-rooftop-subsidies, in a froth of easy money and rising asset prices. Any fool can spend someone else’s money, especially when the sucker doesn’t even know it was their money.
Thus does inflation steal from all and sundry. Silently.
Watch them print money… say hello to inflation.
In the real world, we have to repay our debts. But the world of the ruling class never has to make ends meet. Alan Greenspan admitted that this weekend — effectively announcing that the US is the United States of Wonderland, where no matter how high the debt is they can never default — because [...]
Not many people realize just how utterly unprecedented the Global Financial Crisis was.
To see just how singularly anomalous those months were, let’s revisit an article I wrote for 321 Gold in November 2008.
The graphs below are extraordinary, jaw-dropping plots. At the time I was watching them grow week by week, and was amazed that they were not “everywhere”. I still remember the chill I got in mid October when I first saw the ballistic spike. We’re talking about the money supply of the worlds largest economy. The rescue package blew away the scale — the second graph below covers 90 years. It’s not often you see any graph which is a true hockey stick. This was originally published at 321Gold on Nov 25th 2008. Remember this money (your money if you hold US dollars) was “injected” as a temporary fix (in theory), the plan was to neutralize it, or sterilize it, or insert-your-favourite-euphemism-here-for-getting-it-back-to-normal.
So where does the Money Base graph stand now? It’s not back down to $900 billion (where it was in August 2008), it’s not even stable at $1500 billion, it’s $2000 billion. Our markets run on ever increasing injections of new money. The people [...]
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