The Inflation Emotion(s)

Inflation is more than just any old touchy subject in an age overflowing with crude, visceral debates up and down the spectrum reaching into every corner of life. It is about life itself, and not just quality. When the prices of the goods (or services) you absolutely depend upon go up, your entire world becomes that much more difficult. For those at the “bottom”, that much more unbearable (hello Communism!)

The real issue in that situation isn’t that narrow slice of rising prices, it’s the lack of economic growth which once made it better than palatable we had long ago taken for granted long since disappeared without official acknowledgment.

This isn’t the only emotional plea attached to the topic. Another detours into politics and history, known suspects for irrationality anyway. The world and its leaders aren’t playing with fire anymore, many righteously believe, they’ve offended every god of fiscal and monetary sanity. They must, therefore, pay before the whole thing just blows up for good.

Even the venerable, decent and honest scholar/historian Victor Davis Hanson exemplified this outburst not quite a month ago, in the aftermath of the April CPI:

Human nature stays the same across time and space. That is why there used to be predictable political, economic and social behavior that all countries understood.

The supply of money governs inflation. Print it without either greater productivity or more goods and services, and the currency cheapens. Yet America apparently rejects that primordial truism.

In this sense, inflation isn’t the goal it’s rather the proof; we told you, we repeatedly warned those idiot politicians would go too far and now with consumer prices skyrocketing the whole world can see we were right all along. You should’ve listened!

Inflation is, in this sense, the first vindication before a call to arms, with everyone shoved onto the one side whether they previously liked it or not. 

I actually agree with Hanson in much of what he says, yet I’m accused of all the sins in the fiscal calendar for refusing to agree it must end up in this way. It’s alleged an I’m a closet Keynesian or even a central bank shill, covering up for these reckless money printers by denying the currency and consumer price devastation in front of our very eyes, shamefully misleading the public as it happens.

Those aren’t it at all, there will be Hell to pay for all the debt and fiscal deficits…at some point.

That point isn’t now or indeed anytime in the foreseeable future. What I don’t agree with is the money printing part of it. Like or not, academic and official research is moving in this direction, too, including among a growing swath of the “money printers.”

Because of this very different monetary reality, regardless of each worthless theory and worthy tradition, honest analysis demands setting aside all that legitimate distaste and genuine horror. So long as the situation remains this way, no money printing, quite the opposite (much thanks to QE doing real monetary harm), no matter how anyone feels about rising food prices or the out-of-control Congress and its Executive partners (of both parties) the chances of real inflation will only ever be extremely slim.

To put these people in their place, to choke reason down their throats, it will require other means. We have bigger fish to fry in the meantime. 

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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