What’s in everybody’s face, especially in America, is inflation, but there’s far more than that going on in their economy, and basically the global economy.
And none of it’s good.
But let’s look at inflation first, in particular the stuff that chews into your wallet every day rather than the somewhat tame measure of CPI.
Gasoline for cars is, for Americans, the most in-your-face aspect of this; for historical and psychological reasons it seems to grind them more than food prices. Of course the joke is that in 2008 Democrat suckhole media like the LA Times was boasting about “The joy of $8 gas.
You’d think the Democrats would therefore be happier right now.
Companies are trying to trick people as they did back in the 1970’s by shrinking the size of the products they sell “for the same price”. I don’t think it works.
The official CPI for May surged to 8.6%, but if it was being calculated as it was in 1980 it would be 17% (see the graph above). Moreover the month-on-month inflation is not stopping but itself increasing; in other words inflation is not going away any time soon. Good to see that one of Biden’s numerous idiot hires, Treasury Secretary Yanet Yellen, is now publicly regretting saying that inflation in 2021 was “transitory”. Of course she’s not alone as the US MSM have desperately tried to prop up Biden and the Democrats on this issue for a year now.
On top of all this is the fact that wage growth is rapidly slowing, which means that wages are actually going backwards, the highest negative since 2006 actually.
Add in the problems of the stock market – which is also shrinking American’s wealth, starting with pension funds, plus a possible crash in the housing market – and you’re looking at big economic problems across the board. This has business people starting to also get on edge:
- Get ready for 70’s style stagflation – The World Bank.
- “US economy facing “a hurricane” – JP Morhan CEO
- “Super bad feeling”about the US economy – Elon Musk, who’s already cutting Tesla staff by 10%.
Why is there so much doom and gloom though? Recessions happen regularly and we’ve seen inflation and even stagflation before and survived them. There are two answers to this question.
First, what’s different this time is the number of major factors coming together, each of which has caused recessions in the past on their own:
- The business cycle.
- High energy prices.
- Inflationary pressures other than energy (supply chain problems plus $6 trillion of unneeded US government spending in the last two years)
- Excessive debt-funded speculation.
- Secular shifts in the economy.
That last one needs explanation:
Examples include: new global competition (1970s); currency devaluations; costs of cleaning up decades of pollution (1970s); financialization (1980s to the present), geopolitical shifts in alliances, social disorder, demographics (aging of the workforce, mass retirement) and sea changes in the distribution of income and power to labor and capital.
It’s a perfect storm and it’s built on the back of two decades of poor economic policies.
Second, the normal paths of getting out of factors 1 and 3 – high interest rates to crush inflation and massive Keynesian-style state spending – are now hemmed in by the massive amounts of debt the US has created in the last twenty years, both public and private. In fact it’s increasingly hard to tell the difference between the two, so dependent upon cheap created credit from the Federal Reserve have the markets – especially Wall Street and the housing market – become.
The higher interest rates will slow the economy and cause unemployment. It will also swallow up tax revenue as the government has to pay interest on its massive debt. But more critically, it will increase the rate of default on home mortgages. Those defaults will make mortgage-backed securities less valuable and more unpredictable. That’s how the 2008 housing market seized up.
In 2008 the US housing crisis was solved by having the Federal Government and the Federal Reserve buy trillions of dollars of mortgages and Mortgage Backed Securities that had become nearly worthless. But having re-created that situation what are they going to do now (factor 4)?
The energy crisis is also not going away because high fossil fuel prices are seen as the way to “transition” the economy to the world of renewable energy. If that’s your goal then it’s a logical play – but it will kill consumers (in some cases literally), kill the politicians intent on crashing through the wall of such massive energy change – and that’s assuming it’s even possible, which it isn’t (42 Inconvenient Truths on the “New Energy Economy”) and possibly kill the economy.
Two years ago I playfully predicted The Great Crash of 2034, but allowed that it might come later – or sooner.
Brace for impact.
No Minister 
70’s policies lead to 70’s outcomes.
Where’s are the 2020’s Reagan & Thatcher?
What many of the vocal youth of today don’t seem to realize is that only wealthy societies can afford to support their intersectional whining.
In Russia, Hungary and Turkey
They are called Vladimir Putin, Viktor Orban and Recep Erdoğan
It wasn’t “solved”, it was swept under the rug by stealing from the poor to bail out the rich who had created the mess in the first place
A lot of people made a lot of money from that “crisis” and a lot more lost their life savings
OMG there IS one on every bus.
Don’t even think of it. His comments are so transparently stupid they don’t deserve a reply. If the murderer Putin, Oban and Erdogan are the answer to anything it was a damned stupid question.
I was going to reply but you’ve said about all that needs to be said. Not sure that Reagan or Thatcher ever ordered the poisoning of political opponents or imprisoned them on trumped up charges.
Just calling someone stupid for saying something you wish wasn’t so is not debate in the realm of ideas, rather it is the level of discourse found in the kindergarten sandpit.
You see those gentlemen I named greatest sins are that they put the interests of their own citizens first rather than doing the will of the elites currently running the West (into the ground).
One of the soft levers of power those in charge of us is that they control the narrative and they don’t like it that they do not tug their forelocks before the Gods of “progressivism” as defined by themselves and nor do they surrender their national resources to be looted by Western Oligarchs this is used to demonize them
Hah – the number of suspicious deaths convenient to the Clintons is so numerous that the term Arkanicide is deployed when they occur.
The level of disinterest in the murder of Seth Rich who died with two bullets in the back in a Washington thoroughfare is astonishing and to raise the fact he was the administrator of the DNC Email server supposedly hacked by the Russians is to invite the appellation “conspiracy theorist”
And many of the Jan 6 protestors are still being held without bail eighteen months after the event while those who burned American inner cities wander free
Then there is this
Do you really think the Government of New Zealand represents me, or that any MP in the NZ parliament represents me and my interests actually matters because they don’t – I don’t vote because there is nobody worth voting for
You remind me of boxer in animal farm Veteran
Central bankers and politicians have systematically bankrupted the globe over the last five decades while globalist fat-cats in high finance have run off with all the pie. The current economic system can only function if all of that debt is repaid – but it can’t be repaid, ever, even if our masters actually wanted to.
So the only solution might be for our elites to undertake a managed demolition of the current system and replace it with something else. The primary component of this realignment will be to protect the wealth and power of the elites as they stand today. I wonder what they’re going to call this great reset ?
Andrei … have to wonder why you choose to live here rather than in the rodina where you can enjoy all the benefits that your nice Mr Putin has on offer.
Yes that’s a mystery to me as well. I’ve offered to take up a collection for his airfare to no avail.
I cannot understand why he’d want to live in a place he so despises.
Kind of an insult to us, biting the hand that feeds sort of.
Don’t know his story but we took him in and gave him a safe place to live and he repays us by crapping on us. How ungrateful.
Fate Veteran
I was born in a different time and place – my kids who have real world transferable skills have all bailed.
It doesn’t make me happy but there you go, it is a symptom of the decline as is Government which is a joke
New Zealand was a paradise when I came here but you lot are parochial, provincial and complacent and seem blissfully unaware that you are losing what made it so.
Old C, I’m not crapping on anyone – just calling it as I see it
I personally think we a witnessing the decline of the West and a shift in the center of gravity in human affairs from Oceana to Eurasia
You don’t like hearing that – fine.
Enjoy your $3.12 / Litre and rising gasoline, empty supermarket shelves and feel a sense of pride about the Minister of Foreign Affairs striding about on the world stage.