MCViewPoint

Opinion from a Libertarian ViewPoint

Posts Tagged ‘economic growth’

Inflation, the Price Level, and Economic Growth: Everything the Elites Tell You about It Is Wrong

Posted by M. C. on September 9, 2022

Inflation is not a product of corporate greed or rising wages. It is a fraud perpetrated by government authorities that impoverishes average people while enriching elites.

In the late nineteenth century both the UK and America had strict gold standards and declining price levels. This was also the period of greatest relative advancement in economic history, when both countries asserted themselves as truly industrialized economies, and the most powerful nations in the world.

https://mises.org/wire/inflation-price-level-and-economic-growth-everything-elites-tell-you-about-it-wrong

J.R. MacLeod

Fundamentally, inflation is fraud. The central government or bank printing more money lessens the value of the money already in circulation. A truckload of sand isn’t particularly valuable in Saudi Arabia. An increased supply of money means ultimately that prices denominated in that money will go up. Unless you are the one to receive that new money at its point of entry, and thus keep pace with the inflation, the real value of your money holdings will go down.

So, in essence the government has taken wealth from you, and offered nothing in return, except the vague promise that the inflation will grow the economy, from which you will subsequently benefit. As we will show in this article, that is a false promise that has never once worked, and there is plentiful evidence against it ever working. Fortunately, there is another way.

If inflation is a fraud on the general populace in that its false promise of improved growth rings hollow time after time, it is more specifically a fraud on ordinary working people. When new money is created it enters the economy through the government, financial, and corporate sectors. The distributors and initial recipients of this new money obtain it before prices go up, in fact prices are then driven up by their spending of the new money. Those responsible for the inflation are thus ahead of it.

Ordinary people, however, are behind the inflation. The new money only works its way to them after prices have already increased. And if the inflation is continuous, then they are already behind the next wave of money printing and price increases.

Even if there is a limited burst of inflation which is then totally halted, the elite still benefit at ordinary people’s expense. The new money is printed, the first holders spend it when prices are still low, this spending drives up prices, the money then works its way through the economy in a more general distribution, and ordinary people are right back where they started: with higher nominal wages but having to pay higher nominal prices too. Meanwhile the elite gained increased real purchasing power at the beginning, without doing anything to earn it, instead just having the right connections to obtain the newly printed cash.

Thus, inflation can only ever benefit the elite at the expense of ordinary people. Which is hardly surprising given the revolving door between the federal reserve and the financial sector. The same people who control the power of inflation are the ones who can directly benefit from it.

However, inflation is completely unnecessary for a growing and prosperous economy. Under a strict gold standard, inflation, defined by Mises as the printing of money by a government entity, does not take place. Thus the only way price inflation, or more aptly, price increases, can take place are due to natural economic or environmental factors and government folly other than inflation.

Though there may be price increases in specific areas, under a strict gold standard the guaranteed general trend is for price decreases. How so? If the government isn’t printing money, then prices are dictated fully by the market. In a free-market competition and innovation drive prices down. To stay in business, firms must make a profit; to make a profit, they have to attract customers; to attract customers, they have to offer higher quality products at a lower price than their competitors.

This process has taken place consistently throughout economic history. Take, for example, the pocket calculator. Free inquiry and the ability to make a profit led to the innovation of the first commercially available calculators. Initially they are very expensive as a cutting-edge product. However, over time the price came down as near universal demand for the product combined with the effective resource marshaling of a free and competitive market made pocket calculators widely available at a low price.

And yet despite a lowering of prices, economic growth has occurred, as more people have a new and useful product in their hands. Furthermore, at the same time the price came down, competition led to the product becoming sleeker and more powerful.

Inflation is pursued as a fundamental misconception of the nature of wealth and economic growth. Money is not wealth, printing more money does not lead to a growth in the real economy. Were all those trillionaires in Zimbabwe in the mid-2000s wealthy, even though in real terms they could purchase fewer goods than in previous eras? Why was their economy declining if they were printing so much money?

Rather, wealth and growth are defined by the standard of living. While this has a subjective component, common sense can inform us of some objective ways to gauge an individual’s material well-being.

Inflation is not necessary for real wealth and real growth. These things are obtained by producing more goods and services available at the lowest cost. A declining general price level takes place as a consequence of true economic growth and wealth generation.

It is logically impossible that under a strict gold standard with no inflation, combined with a free market in goods and services, there could be any situation other than economic growth at the same time as a declining price level. But this is also backed up by the empirical record.

In the late nineteenth century both the UK and America had strict gold standards and declining price levels. This was also the period of greatest relative advancement in economic history, when both countries asserted themselves as truly industrialized economies, and the most powerful nations in the world.

See here, for example. Or, for a lengthier (yet still pleasantly concise) discussion of this subject, see George A. Selgin, “Less than Zero: The Case for a Falling Price Level in a Growing Economy

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Why Doesn’t Increased Demand Bring More Supply?

Posted by M. C. on January 2, 2022

This view is questionable if individuals did not allocate enough savings in order to support increases in the production of goods and services. Also, note that to be able to exchange something for goods and services individuals must have this something. This means that in order to demand goods and services individuals must produce something useful first. Hence, supply drives demand and not the other way around. 

https://mises.org/wire/why-doesnt-increased-demand-bring-more-supply

Frank Shostak

By popular thinking, the key driver of economic growth is increases in the total demand for goods and services. It is also held that the overall output increases by a multiple of the increase in expenditure by government, consumers and businesses.

Following this way of thinking it is not surprising that most commentators are of the view that by means of fiscal and monetary stimulus it is possible to prevent the US economy falling into a recession. For instance, by increasing government spending and central bank monetary pumping it is held that this is going to strengthen the production of goods and services, i.e., the overall supply.

It follows then that by means of increases in government spending and central bank monetary pumping the authorities can grow the economy. This means that demand creates supply. However, is it the case?

Shrinking Savings Poses a Threat to US Economy

We suggest that without the expansion and the enhancement of the production structure, it is going to be difficult to increase the supply of goods and services in accordance with the increase in the total demand.

The expansion and the enhancement of the infrastructure hinges on the expanding pool of savings. (This pool comprises of final consumer goods). The pool of savings is required in order to support various individuals that are employed in the enhancement and the expansion of the infrastructure. Given all the past and present reckless fiscal and monetary policies, we have estimated that the US pool of savings is currently most likely under severe downward pressure (see chart).

fs

Furthermore, neither government activities nor monetary pumping generates wealth. Consequently, within all other things being equal, in the absence of increases in wealth it is not possible to have increases in savings as a result of increases in government outlays and increases in the money supply.

Why Supply Precedes Demand?

See the rest here

Author:

Contact Frank Shostak

Frank Shostak‘s consulting firm, Applied Austrian School Economics, provides in-depth assessments of financial markets and global economies. Contact: email.

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We Are Pawns In A Bigger Game Than We Realize | Peak Prosperity

Posted by M. C. on November 2, 2020

https://www.peakprosperity.com/we-are-pawns-in-a-bigger-game-than-we-realize/

by Chris Martenson

“I had grasped the significance of the silence of the dog, for one true inference invariably suggests others…. Obviously the midnight visitor was someone whom the dog knew well.”

 ~ Sherlock Holmes – The Adventures of Silver Blaze

Is it possible to make sense out of nonsense?

So much these days is an incoherent mess.  It’s complete nonsense.

Page 1 excitedly beams about a glorious rebound in GDP.  Yay economic growth!

Page 2 worryingly notes the near complete failure of Siberian arctic ice to reform during October and that hurricane Zeta (so many storms this year we’re now into the Greek alphabet!) has made punishing landfall.

Each is a narrative. Each has its own inner logic.

But they simply do not have any external coherence to each other. It’s nonsensical to be excited about rising economic growth while also concerned that each new unit of growth takes the planet further past a critical red line.

These narratives are incompatible. So which one should we pick?

Well, in the end, reality always has the final say. As Guy McPherson states: Nature bats last.

So better we choose to follow the narrative that hews closest to what reality actually is, vs what we desperately want it to be.

‘They’ Don’t Care About Us

While issues like climate change and economic growth may be difficult to fully grasp and unravel, direct threats to our lives &/or livelihoods are much more concrete and something we can react to and resist.

Such immediate and direct threats are now fully in play and, once again, they’re accompanied by narratives that are completely at odds with each other.  I’m speaking of Covid and the ways in which our national and global managers are choosing to respond (or not).

It’s a truly incoherent mess about which both social media and the increasingly irrelevant media are working quite hard to misinform us.

The mainstream narrative about Covid-19, in the West, is this:

  • It’s a quite deadly and novel disease
  • There are no effective treatments
  • Sadly, no double-blind placebo controlled trials exist to support some of the wild claims out there about various off-patent, cheap and widely available supplements and drugs
  • Health authorities care about saving lives
  • They care so much, in fact, that along with politicians they’ve decided to entirely shut down economies
  • There’s a huge second wave rampaging across the US and Europe and there’s nothing we can do to limit it except shut down businesses and people’s ability to travel and gather
  • You need to fear this virus and its associated disease
  • All we can do is wait for a vaccine

The alternative narrative, one that I’ve uncovered after 9 months of almost daily research and reporting, is this:

  • It’s not an especially dangerous disease and it’s certainly not novel
  • There is a huge assortment of very effective, cheap and widely-available preventatives and treatments including (but not limited to)
    • Vitamin D
    • Ivermectin
    • Hydroxychloroquine
    • Zinc
    • Selenium
    • Famotidine (Pepcid)
    • Melatonin
  • Use of a combination of these mostly OTC supplements could reasonably be expected to drop the severity of illness and the already low mortality rate by 90% or (probably) more
  • Western health authorities have shown either zero interest in the results of studies mainly conducted in poorer nations on these combination therapies or…
  • They have actively run studies designed to fail so that these cheap, effective therapies could be dismissed or…
  • Set up proper studies but which started late, have immensely long study periods and most likely won’t be done before a vaccine is hastily rushed through development.

By the way – every single one of my assertions and claims is backed by links and supporting documentation from scientific and clinical trials and studies.  I am not conjecturing here; I am recounting the summary of ten months’ worth of inquiry.

The conclusion I draw from my narrative (vs. theirs) is that we can no longer assume that the public health or saving lives has anything to do with explaining or understanding the actions of these health “managers” (I cannot bring myself to use the word authorities).

After we eliminate the impossible – which is that somehow these massive, well-funded bodies have missed month after month of accumulating evidence in support of ivermectin, hydroxychloroquine, vitamin D, NAC, zinc, selenium and doxycycline/azithromycin – what remains must be the truth.

As improbable as it seems, the only conclusion we’re left with is that the machinery of politics, money and corporate psychopathy is suppressing life saving treatments because these managers have other priorities besides public health and saving lives.

This is a terribly difficult conclusion, because it means suspending so much that we hold dear.  Things like the notion that people are basically good. The idea that the government generally means well. The thought that somehow when the chips are down and a crisis is afoot, good will emerge and triumph over evil.

I’m sorry to say, the exact opposite of all of that has emerged as true.

Medical doctors in the UK NHS system purposely used toxic doses of hydroxychloroquine far too late in the disease cycle to be of any help simply to ‘make a point’ about hydroxychloroquine.  They rather desperately wanted that drug to fail, so they made it fail.

After deliberately setting their trial up for failure, they concluded: “Hydroxychloroquine doesn’t help, and it even makes things worse.”

Note that in order to be able to make this claim, they had to be willing to cause harm — even to let people die.  What kind of health official does that?

Not one who actually has compassion, a heart, or functioning level of sympathy.  It’s an awful conclusion but it’s what remains after we eliminate the impossible.

Getting Past The Emotional Toll

Science has proven that cheap, safe and significantly protective compounds exist to limit both Covid-related death and disease severity.

Yet all of the main so-called health authorities in the major western countries are nearly completely ignoring, if not outright banning, these safe, cheap and effective compounds.

This is crazy-making for independent observers like me (and you) because the data is so clear. It’s irrefutable at this point.  These medicines and treatments not only work, but work really, really well.

However most people will be unable to absorb the data, let alone move beyond it to wrestle with the implications.  Why? Because such data is belief-shattering.  Absorbing this information is not an intellectual process; it’s an emotional one.

I don’t know why human nature decided to invest so much in developing a tight wall around the belief systems that control our actions and thoughts. But it has.

I’m sure there was some powerful evolutionary advantage. One that’s now being hijacked daily by social media AI programs to nudge us in desired directions. One that’s being leveraged by shabby politicians, hucksters, fake gurus, and con men to steer advantage away from the populace and towards themselves.

The neural wiring of beliefs is what it is. We have to recognize that and move on.

Some people will be much faster in their adjustment process than others.  (Notably, the Peak Prosperity tribe is populated with many fast-adjusters, which is unsurprising given the topics we cover…tough topics tend to attract fast adjusters and repel the rest)

To move past the deeply troubling information laid out before us requires us to be willing to endure a bit of turbulence.  It’s the only way.

For you to navigate these troubling times safely and successfully, you’ll need to see as clearly as possible the true nature of the game actually being played.  To see what the rules really are – not what you’ve been told they are, or what you wish or hope they are.

The Manipulation Underway

The data above strongly supports the conclusion that our national health managers don’t actually care about public health generally or your health specifically.

If indeed true, then the beliefs preventing most people from accepting this likely include:

  • Wanting to believe that people are good (a biggie for most people)
  • Trust and faith in the medical system (really big)
  • Faith in authority (ginormous)

There are many other operative belief systems I could also list. But this is sufficient to get the ball rolling.

Picking just one, how hard would it be for someone to let go of, say, trust in the medical system?

That would be pretty hard in most cases.

First not trusting the medical system might mean having to wonder if a loved one might have died unnecessarily while being treated.  Or realizing that you’re now going to have to research the living daylights out of every medical decision before agreeing to it.  Or worrying that your medications might be more harmful to you over the long haul than helpful (which is true in many more cases than most appreciate).  It might mean having your personal heroes dinged by suspicion — perhaps even your father or mother who worked in the medical profession.  It would definitely require a complete reorientation away from being able to trust anything you read in a newspaper, or see on TV, about new pharmaceutical “breakthroughs”.

Trust, which is safe and warm and comforting, then turns into skepticism; which is lonelier and insists upon active mental involvement.

But, as always, hard work comes with benefits — with a healthy level of skepticism and involvement, the families of those recruited into the deadly UK RECOVERY trial could have looked at the proposed doses of HCQ (2,400 mg on day one! Toxic!) and said, “Not now, not ever!” and maybe have saved the life of their loved one.

Look at that tangled mess of undesirables that comes with unpacking that one belief: regret, uncertainty, shame, doubt, fallen idols, and vastly more additional effort. Are all up for grabs when we decide to look carefully at the actions of our national health managers during Covid.

Which is why most people simply choose not to look.  It’s too hard.

I get it. I have a lot of compassion for why people choose not to go down that path.  It can get unpleasant in a hurry.

But, just like choosing to ignore a nagging chest pain, turning away in denial has its own consequences.

The Coming ‘Great Reset’

My coverage of SARS-CoV-2 (the virus) and Covid-19 (the associated disease) has led me to uncover some things that have made me deeply uncomfortable about our global and national ‘managers’.  Shameful things, really.  Scary things in their implications for what we might reasonably expect (or not expect, more accurately) from the future.

Once we get past the shock of seeing just how patently corrupt they’ve been, we have to ask both What’s next? and What should I do?

After all, you live in a system whose managers either are too dumb to understand the Vitamin D data (very unlikely) or have decided that they’d rather not promote it to the general populace for some reason.  It’s a ridiculously safe vitamin with almost zero downside and virtually unlimited upside.

Either they’re colossally dumb, or this is a calculated decision.  They’re not dumb.  So we have to ask: What’s the calculation being performed here?  It’s not public safety. It’s not your personal health. So… What is it?

This is our line of questioning and observation. It’s like the short story by Arthur Conan Doyle in Silver Blaze that many of us informally know as “the case of the dog that didn’t bark”.  As the story goes, because of a missing clue – a dog who remained silent as a murder was committed – this conclusion could be drawn: the dog was already familiar with the killer!

The silence around Vitamin D alone is extremely telling. It is the pharmacological dog that did not bark.

One true inference suggests others.  Here, too, we can deduce from the near total silence around Vitamin D that the health managers would prefer not to talk about it. They don’t want people to know. That much is painfully clear.

Such lack of promotion (let alone appropriate study) of safe, effective treatments is a thread that, if tugged, can unravel the whole rug.  The silence tells us everything we need to know.

Do they want people to suffer and die?  I don’t know. My belief systems certainly hope not. Perhaps the death and suffering are merely collateral damage as they pursue a different goal — money, power, politics?  Simply the depressing result of a contentious election year?  More than that?

We’ve now reached the jumping off point where we may well find out just how far down the rabbit hole goes.

A massive grab for tighter control over the global populace is now being fast-tracked at the highest levels. Have you heard of the Great Reset yet?

If not, you soon will.

In Part 2: The Coming ‘Great Reset’ we lay out everything we know so far about the multinational proposal to transform nearly every aspect of global industry, commerce, trade, and social structure.

If you read on, be ready and willing to let go of cherished beliefs and to suspend what you know to be true. Because none of us has that in hand.  It’s going to be a wild ride from here.

Something very big is afoot and I suspect that Covid-19 is merely an excuse providing cover for a much bigger power grab over the world’s wealth and peoples.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access).

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