Unsurprisingly Surprised

The belief that printing and adding massive amounts of money to the supply is going to cause inflation, is old economic thinking.

Do you remember the economists over the last two years who were very keen to pour money into the economy as a response to Covid-19 saying this? And people were saying, you can't put a price on life?

Do you notice how the same economists are now saying quite different, complaining about rampant inflation and the effect climbing prices are having on lives?

In a bid to slow down the inflation rate, the US Federal Reserve increased interest rates by 0.75% yesterday, with the current inflation rate numbers sitting at 8.6% and climbing as we speak. They are saying it is a "surprise" that inflation is so aggressive, when all of those "old economic thinkers" predicted and warned about it back in early days of Covid - but were ignored and belittled for their backward thinking.

Life is priceless.

What people don't seem to get is that while they say, "you can't put a price on life" when it comes to how much one is willing to spend on care for a loved one, that opens up the downside of the price on life too, meaning that life becomes "priceless" - ZERO. The value of something depends on what someone is willing to pay and as we have seen in the last couple years, people heavily overweigh the present moment fears, at the cost of future positions. By pumping money into the economy over the last two years they inflated the "price of life" but now that is coming crashing down, so the current value of life is far, far lower - as the cost of living spirals out of control.

All-in spending was approaching $13 trillion as of mid-2021. That’s more than the US spent in it’s 13 most expensive wars combined. Nasdaq Article

That article from late last year is a decent read, by the way.

As said, the current inflation in the economy is not a surprise, it is just that for the last decade, the inflation indicators has been in other areas, namely the stock markets that aren't monitored, rather than in the CPI goods - but once that money started getting pumped into consumer pockets, that all changes. Quantitative easing has pushed trillions into the US economy and now, trillions more have been pushed in - not to mention the trillions more globally. The "missed" indicators are like someone sitting in a well-airconditioned house, predicting what the outside temperature is by looking out the window.

However, once all this "extra" money pours into the consumer pocket, the consumer starts to demand with it, and when demand outstrips supply, prices are going to increase, as we have seen in the housing markets, with many being overheated. On top of this free money being directly injected, interest rates have been at all time lows and even in minuses, so borrowing more money is very cheap, and people have been "taking advantage". Throw in the lockdowns, supply chain disruptions and now wars on top - prices are only heading one way.

There is no surprise in this.

Well, other than the surprise that so many people believed what the governments and media were spouting, that all of this extra money was not going to lead to inflation. While the various narratives can keep getting twisted, at the end of the day, laws of economics will win, because, that is the law of the economy. There is no beating them or changing them, there is only working with them, and that "work" has been grossly mismanaged and the mismanagement grossly accepted by the majority of people, because they had "free money" pouring into their pockets.

How free does the money feel now?

It seems that while an individual can say "you can't put a price on life", what they really mean is, as long as someone else is paying, there is no roof. However, once that cost becomes personal, there really is a price, which might be everything one has. We are now seeing the realization that the "someone else paying" was us all along. But, while this may come as a surprise to many people, governments only ever use our money.

However, that flow of money has been outside of our attention, because it has been pushed into the finance markets, where most people don't spend much time, as they have no direct investment there that they manage themselves. It is only a minority that have their eye on those markets and even them, the majority of the value is in the hands of the few. It is only when the price of lettuce goes up 400% and people are having to tighten their belts at a personal level that the "roof price" on life is felt.

It is easy to spend someone else's money and that is what people have been doing, without realizing that they are actually diving into their own pockets from future resources. At some point, that debt has to be repaid and that is where we are now, a hole burned in the wallet, filled by a huge stack of IOUs - and the collectors are here.

Little of this is surprising to anyone, and should be of no surprise to the people who are managing the cash flow. However, perhaps their public-facing narrative was that convincing, that they started to believe their own fantasy, thinking that they could indeed break the laws of economics.

So far, the laws are holding firm.

Taraz
[ Gen1: Hive ]