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[ConferredDiligence]

About That Inflation Problem....

From: Karl Denninger

Jimmy Carter was famous for his cardigan-sweater talks while imploring people to set their thermostats to 65F in the winter. I remember it well.

For a huge number of people that wasn't a necessary request; inflation was high enough that people could not afford to run their heat at a higher level. The bill from doing so was simply beyond their ability to pay.

Plenty of people blame Carter for all of this, but in fact Carter wasn't nearly so much to blame as put forward. Shall we recall that Nixon literally assaulted Fed President Burns during his tenure because Burns was not doing as Nixon wanted with monetary policy?

We continue to believe in the face of evidence to the contrary that is unbroken and has occurred every single time that running large deficits is not only sustainable whenever it seems to falter we should do more of it. The latest insult of an alleged $1.9 trillion "for the people" is anything but; only about 10% of that money will wind up in your pocket. The rest will grease the "betters" palms in one form or another across both failed US State Governments that have done stupid things for decades and their pals.

That this will blow up in our face is a certainty. That Biden "caused" it, which he will get blamed for, is actually true but not while he was President; in fact it was while he was VP that the largest seed of this disaster was sown after 2008. Then Trump came along and made it worse.

Of course Biden hasn't pulled back from it, so he certainly deserves what he gets when it comes, as does everyone else involved. But make no mistake folks; this is not a singular event nor does it rest with one group of politicians over another. Indeed, the problem with the "2% inflation" theme that The Fed likes to run is that not only is it illegal unless it is evenly distributed, and it never is, someone gets ****ed.

Why is it illegal? Because someone will get ****ed. Congress actually mandated stable prices in the Federal Reserve Act and has never changed that.

But -- nobody goes to jail.

The difference between the sort of inflation we saw in the 1970s and early 1980s is that lots of people get very poor, but if you get through it and survive economically, you might do ok. Just don't need that which you think you accumulated during the interim or suck-starting a shotgun will look awfully attractive.

The problem with thinking it will all be ok is that right beyond the point where we were that last time is the mass use of gallows and other very unpleasant things. Nations that go over that knee-point, and nobody knows exactly where the point of no return is, suffer failure of their civil institutions. Roving gangs terrorize neighborhoods -- not just with drug dealers shooting it out but various acts of not-so-random violence including mass-arsons, "death squads" and similar. The history books are littered with examples and often serious sectarian violence that borders on or winds up being an effective civil war are part and parcel of the outcome and blowback as well.

Attempting to "hide" from such via various investment strategies is not only stupid it is to promote the failure as an active co-conspirator. Why? Because it cannot work; if you have a stack of gold and I have a chicken when you get hungry enough the price of the chicken is the entire stack of gold, not one coin. Thus you will eventually either kill me or I will kill you; the entire premise of an orderly civil society is, at that point, gone. To think you can hide from this is to shirk your actual civic responsibility to prevent it from happening in the first place.

Pray we only get a Jimmy Carter style outcome. Given the scale this time around, however, odds are it is likely to be much worse.

What I see all around me, in both the government and civilian sector, is people gleefully spraying gasoline on everything in the belief that there will never be someone with a match, or even a lightning strike that burns it all to the ground.

That's a fool's game folks, yet how many are speaking against it -- or doing something even more-forceful, despite all of it being black-letter illegal?

Nobody.

https://market-ticker.org/akcs-www?post=241755