Alarm Bell >> Inflation is Not an Accident. It's Government Policy

Spiralling 'Superinflation' is a leading candidiate to replace war in Ukraine as a kay global crisis for the rest of 2022. As the name suggests, superinflation is worse than high inflation, but not as bad as hyperinflation.

This page tracks signs that inflation is not happening by accident, but is the easiest way for Western governments to escape their unpayable debt loads.

Obviously, no politician or central banker can say that out loud, but the evidence is mounting that this is their chosen solution. That could mean a very rough few years for workers, savers and – most of all – the world's poor.

Updates:

'Liquidate' Savings

2015 – An International Monetary Fund (IMF) paper, 'The Liquidation of Government Debt' outlines the process that Western economies are now going through with deeply negative inflation-adjusted interest rates. Here is the abstract of the IMF paper:

High public debt often produces the drama of default and restructuring. But debt is also reduced through financial repression, a tax on bondholders and savers via negative or belowmarket real interest rates. After WWII, capital controls and regulatory restrictions created a captive audience for government debt, limiting tax-base erosion. Financial repression is most successful in liquidating debt when accompanied by inflation … We suggest that, once again, financial repression may be part of the toolkit deployed to cope with the most recent surge in public debt in advanced economies.

2019-07-18 – "Governments are likely to continue printing money to pay their debts with devalued money. That’s the easiest and least controversial way to reduce the debt burdens and without raising taxes" –Ray Dalio, Bridgewater Associates

Monetary super-elites want superinflation

2019-08-15 – Former central bankers, in a report for BlackRock called for the adoption of money-financed fiscal policy – similar to ‘helicopter money’. Stanley Fischer and Philipp Hildebrand – former chiefs of Israel and Switzerland’s central banks – proposed an inflationary policy of “going direct” which involves transferring money directly into the hands of public and private actors.

Lagarde is 'over' price-stability

2019-10-30 – Christine Lagarde, president of the European Central Bank, tells Europeans that "We should be happier to have a job than to have our savings protected“. The ECB's core task is to keep the purchasing power of the euro stable. That means low inflation, no deflation. The fact that Lagarde does not prioritise price stability is a bad sign for Europe's savers.

Inflation: the 'tried and tested' solution

2022-01-22 – "The Fed keeps talking about how it's going to tackle inflation, but it doesn't actually mean it. They know that these debts have to be inflated away … because it's essential to fix the balance sheet. We've been here before. We were here after World War 2, the United Kingdom was here after the Napoleonic Wars. It was here after the First World War after the Second World War. There are tried and tested ways of dealing with this, and in a democracy the tried and tested way is inflation" –Russell Napier

Inflation 'fixes this'

2022-01-36 – High inflation will fix the US economy, according to Luke Gromen:

"Let inflation run 10%+ for 4 years, implement yield curve control + big deficits restoring domestic industry, let the dollar tank, so we can get our economy going again. It’s what they’re gonna have to do in the end, might as well do it sooner so we can all get on w/our lives."

Why governments love inflation

2022-02-11 – Short video explainer from Daniel Lacalle: Why Governments Love Inflation. Key quote:

Governments benefit enormously from inflation … Why? Because they collect more indirect tax revenues. And they reduce the real value of debt, passing the debt-burden to the real economy, to savers and wage earners … So that real wages and deposit savings plummet.