Could it be that the governments of the world actually want inflation?
Not the hapless goons who have to face electorates at the ballot box that is, but the functionaries that sit behind them, inside what that bête noir of everything, Donald Trump, called the Deep State.
Getting elected or re-elected in a period of high inflation is always very tricky.
Jimmy Carter couldn’t do it in the USA. James Callaghan couldn’t do it in the UK. Both were incumbents, and both are now remembered largely as failures or at best nonentitites.
Will Joe Biden go the same way?
As things stand, it seems quite possible, although this year it’s only his party which is likely to take a drubbing in elections, as his own job isn’t actually on the line till 2024.
A lot can change in politics, and quickly, but as it stands Biden’s poll ratings are lower now than even Donald Trump’s were. For a man like Biden, who sets himself up as all that’s rational and sane in comparison to Trump’s twittering craziness that’s got to sting.
But there are several very rational reasons why President Biden’s numbers are so low. These include a chaotic military withdrawal from Afghanistan last year and an uprising of parents against the imposition of what’s known colloquially as ‘woke ideology’ in schools.
But the big one is inflation.
And specifically, what’s caused it.
As 2022 got into its stride, the President breezily tried to pass off sharp rises in inflation as the fault of President Putin.
There was a problem with this, though.
Most Americans can remember back to January, and they remember that prices were already going up before the Russians invaded Ukraine.
What’s more, it’s not the Russians who are messing with supply chains and restricting the global ebb and flow of vital commodities to the point where already high prices get pushed even higher. No, that’s being caused by American-led sanctions.
It goes deeper, too.
Because even if the oil price is even higher than it otherwise would be because of restrictions on Russian supplies, Americans know it would still be high anyway.
Why? – because for the better part of a decade and a half the Federal Reserve, and its counterparts in Europe and elsewhere, have been printing money hand over fist and flooding the world with paper currency. Now, everyone knows that when there’s a glut of something on the market – as there is now with the dollar – its value goes down.
That’s bad for the average wage-earner, because the money they get paid doesn’t go as far. The dollar’s worth less, the goods are worth more, the everyday punter is worse off.
Bad news for politicians too, because who’s going to vote for that? Just watch the mid-terms and see.
But it’s not bad news all round, though. Not quite.
There is one beneficiary from this massive devaluation of currency and the concomitant relative impoverishment of ordinary citizens – the state.
That’s because the state – and not only in the USA – has got into terrible debt over the past 15 years. First off, the state apparatuses of the USA and Europe combined to bail out virtually the entire western economy in 2008.
Strike one – massive debt incurred.
But don’t worry, huge money printing programme also initiated, and cleverly marketed under the guise of “stimulus.”
Then came covid.
Again, the combined state apparatuses of the west disappeared inside their own nightmarish disinformation worlds, and halted almost all human contact, never mind economic activity.
Strike two – massive debt incurred.
But don’t worry, huge money printing programme already underway, and cleverly marketed under the continuing guise of “stimulus”, with the added strapline of “build back better.”
Not everyone was on board with all this jiggery-pokery, and some far-sighted pundits warned of inflation long ago. But proponents of money printing had a special way of sneering at them called ‘modern monetary theory’ in which they elaborated a complex system of smoke and mirrors to explain just exactly why a massive boost to the money supply would not mean inflation.
It was an alluring enough theory that when inflation duly did come along, creeping up on the world through hard assets, property and commodities, before bursting into the mainstream narrative a year or so ago, the proponents of MMT argued that this was a different type of inflation.
Yes, they’d been right all along, just like the railway companies in the UK who protest that trains are capable of running in winter weather, but not if there’s the wrong type of snow.
But can it be that the proponents of modern monetary theory really believed the yarn they were spinning?
Or is it more likely that, as educated fellows what they were perpetrating on us was actually a noble lie, along the lines of the one perpetrated by their fellow apparatchik Antony Fauci regarding masks?
Could it be that the top people believe that inflation is actually desirable as a way of wiping out 15 years’ worth of unimaginably high debt, but that they’re not quite ready to come out and say it yet.
For now, let President Biden carry the can. His re-election’s still another two years away, and anyway, he already looks like he’s ailing.
And if push comes to shove, perhaps there will be one or two policymakers who will be willing to come out with their own versions of the truth. Perhaps it will run along the lines of the famous statement issued by the perpetrators of the My Lai massacre: we had to destroy your economy in order to save it.