Fed Chair Jerome Powell apparently doesn’t see the pernicious effects of inflation
At one time, the Federal Reserve’s sole mandate was to maintain stable prices and to “fight inflation.” To the Fed, the financial press, and most everyone else “inflation” means rising prices instead of its original and true definition as an increase in the money supply. Rising prices are a consequence – a very painful consequence – of money printing.
Naturally, the Fed and all other central bankers prefer the definition of inflation as a rise in prices which insidiously hides the fact that they, being the issuers of currency, are the real culprit for increased prices.
Be that as it may, the common understanding of inflation as rising prices has always been seen as pernicious and destructive to an economy and living standards. In the perverted world of modern economics, however, the idea of inflation as an intrinsic evil has been turned on its head and monetary authorities the world over now have “inflation targets” which they hope to attain.
America’s central bank is right in line with this lunacy, as it has been reported that at the Fed’s “May minutes” it wants “a temporary period of inflation modestly above 2 percent [which] would be consistent with the Committee’s symmetric inflation objective.”* Translated into understandable verbiage, the Fed wants everyone to pay at least 2% higher prices for the goods they buy.
Yes, by some crazed thinking US monetary officials believe that consumers paying higher prices is somehow good for economic activity and standards of living! Of course, anyone with a modicum of sense can see that this is absurd and that those who espouse such policy should be laughed at and summarily locked up in an asylum! Yet, this is now standard policy, not just with the Fed, but with the ECU and other central banks.
The baneful consequence of this economic quackery is being felt by American workers as admitted by the Labor Department. Instead of spurring expansion, inflation is eating into and depressing wages:
For workers in ‘production and
nonsupervisory” positions, the value
of the average paycheck has actually
declined in the past year. For those
workers, average ‘real wages’ – a
measure of pay that takes inflation
into account fell – from $22.62 in
May 2017 to $22.59 in May of 2018.*
While the decline in nominal wages is not significant, the manner in which the government now calculates inflation has been skewed to understate its impact. Under the previous calculation, the current US inflation rate is probably closer to 5%.
Wage stagnation is not new. Average real wages peaked more than 40 years ago and have fallen in real terms ever since. Not surprisingly, the drop in wages in real terms began soon after the US went off the last vestiges of the gold standard in 1971.
As sound theory has long ago demonstrated, the idea of economic growth through money printing is absurd. Increases in living standards and real wages can only come about through savings, investment, and capital accumulation. Workers who have superior tools and equipment are obviously more productive than those that do not. Yet, capital goods have to be produced and production takes place over time. Savings allow for the production process.
The level of wages are also closely linked to savings. The greater savings an economy has enables entrepreneurs to bid for workers and increase wage rates. This is how wages rise – competition for labor among businessmen pushes up wage rates. The more savings entrepreneurs have, the higher they can bid for employees.
How and why wage rates rise and how employment is created had been understood by economists of yesteryear. Today, however, the profession is dominated by “inflationists” and monetary cranks who believe that nearly every economic problem can be solved by the printing press. Anyone who holds such ideas cannot be taken seriously.
While the Federal Reserve may think an inflation target will create prosperity, the reality for real wages is quite the opposite. The laws of economic science have not been repealed. An inflation target will lead to the impoverishment of not just workers, but lower living standards for all.
*Jeff Stein and Andrew van Dam, “For the Biggest Group of American Workers, Wages Aren’t Just Flat. They’re Falling.” The Washington Post. 16 June 2018 A10.
Article posted at the Christus Rex page: https://antoniusaquinas.com/christus-rex-page/
A couple of recent articles have once more made the case, at least implicitly, for political decentralization as the only viable path which will begin to solve the seemingly insurmountable political, economic, and social crises which the Western world now faces.
In the last few months, over 3,000 millionaires have fled the hopelessly corrupt and bankrupt state of Illinois. When asked, 47% of Illinoisans would like to leave the state which, over the last decade, has seen over a half million of its residents flee. Naturally, this exodus has exacerbated the Land of Lincoln’s financial straits to catastrophic levels.*
A report published by the American Legislative Exchange Council predicted that the tax flight which is occurring in Illinois will similarly take place in the coming years in high-tax blue states such as California and New York. The 2017 Trump tax reform will accelerate this process since under the new legislation the amount of state income tax that can be deducted on federal tax returns has been capped at $10,000 per family. The authors of the report wrote: “. . . high [income] earners in places with hefty income taxes – not just California and New York, but also Minnesota and New Jersey – will bear more of the true cost of their state government.”**
The not too subtle consequences of the new tax code will mean an even greater exodus of taxpayers out of blue states which will shrink state revenues even further and create job losses across the board.
While those who want to escape the crushing burden of individual state taxation and regulation, if they have the means and desire to do so, can move to more favorable climes, no such option exists (except the drastic step of expatriation) to escape federal tyranny. Yet, the same benefits which occur from a multiple of individual states and jurisdictions would be present if the various nation states which dominate the globe were broken up into smaller political units.
While the authors of the cited articles see the advantage that multiple states have where one can “vote with his feet,” the same logic can be applied to central governments across the planet who are, on the whole, more tyrannical than local jurisdictions. More political bodies would not only provide sanctuary for the oppressed, but it would tend to keep a check on tyranny among existing states.
Political decentralization is a far greater deterrent to government largesse than constitutions, elections, or finding the “right person” to “fix things.” The events of the last few weeks in the realm of US foreign policy once again demonstrate that trusting candidates to fulfill campaign promises is naive, to say the least.
To get to this goal, all and every secession movement, even of a Leftist bent, should be supported, whether they are nations that want to “exit” from larger political units, such as Great Britain from the EU, or within nation states themselves such as California in the US. All should be encouraged.
Of course, the case for decentralization has to be made on ideological grounds. The Left, most likely, will not be a natural ally for secession, nor are conservatives, most of whom are under the spell of “nationalism” and “restoring the Republic.” Yet, the Right offers the best opportunity to build a secession movement and needs to be convinced that the preservation of the nation state will only lead to the complete triumph of liberalism.
Secession would also necessitate the breakup of the nation-state’s monopoly of money and banking. Numerous political divisions would be more likely to adopt a single monetary unit – gold – which would guarantee financial stability rather than the debt ridden paper-money system now in place.
Next to the outbreak of World War III, immigration is the greatest threat to what remains of Western Civilization. Smaller political units would be far better to control their borders than reliance on a central authority which can be easily manipulated from outside agents.
The solution to the myriad of social and economic problems that confront Western societies will not come about from a “reform” of the nation state, but through its dissolution. Only through a world made up of hundreds, if not thousands, of Lichtensteins, Hong Kongs, Monacos, confederacies, free cities, etc., will these crises be hoped to be resolved.
*Tyler Durden, “This $5 Trillion Time Bomb Will Devastate Americans.” Zero Hedge. 9 August 2017. https://www.zerohedge.com/news/2017-08-09/5-trillion-time-bomb-will-devastate-americans
**Robert Frank. “800,000 People Are About to Flee New York and California Because of Taxes, Say Economists.” CNBC.com. 26 April 2018. https://www.cnbc.com/2018/04/26/800000-people-are-about-to-flee-new-york-california-because-of-taxes.html?__source=sharebar|twitter&par=sharebar
The Bomber-in-Chief announces air attacks on Syria
Despite the vehement pleas and letter-writing campaigns by a significant portion of his political base including notable media personalities such as Tucker Carlson against military action in Syria, President Trump committed what looks like political suicide by ordering air strikes on Friday evening. The bombing, thankfully, appeared to have been thwarted by Syrian air defenses, nor, as of this date, has the insane American, British and French action led to a wider conflagration.
As of yet, no doubt due to Divine Intervention, WWIII has not erupted and although the ramifications of the attack will reverberate for weeks to come, what is clear is that President Trump is now firmly in the clutches of the neocons, Israel, and the American Deep State, all of who are the direct beneficiaries of the wanton attack on the Assad regime.
A good portion of Trump’s base is rightfully enraged by the action, which will dash any hope of it coming to his aid if future impeachment proceedings are commenced over the Mueller investigation. Many of Trump’s supporters have been seething ever since he signed off on the $1.3 trillion omnibus spending package in March and his continued failure to start construction on a border wall.
Talk about shooting one’s self in the foot!
Whether President Trump survives until 2020 or is replaced in the interim by neocon Mike Pence, American foreign policy will, in all likelihood, continue its bellicose ways. Ever since WWI, which the current Bomber-in-Chief mentioned in his address announcing the air strikes, America has been an interventionist, destructive, and murderous empire.
The reason for this is that the nation’s ideology had changed where it had once trumpeted the ideas of non-intervention and peace (except, of course, for the people of the South during their heroic attempt at independence) to those that glorified empire and war, largely based on the British model which, ironically, was the system that America seceded from in 1776. By the time of WWI (actually the disgraceful Spanish-American War), the ideals of non-intervention, peace, free trade, and hard money had been gradually replaced by those of empire, central banking, war, and debt.
Until there is a change in ideology, it is unlikely that the US will refrain from its interventionist foreign policy. And, typically, social change comes after men’s minds have been convinced of a different paradigm which, of course, does not happen overnight.
Like the British Empire before it, the only way the US will stop its murderous ways will be from economic collapse or a severe financial panic which threatens or ends the US dollar’s status as the world reserve currency.
Candidate Trump may have been the last hope of an American Firster who had the wherewithal to attain the Presidency. Although not an ideologue, Trump spoke of getting along with Russia, disengaging from the Middle East, and backing out of, or making NATO members pay for their own “defense.” These qualities faded once elected and the ominous talk about scuttling the Iranian arms deal and spending more on the military were pushed ahead.
After WWII, Britain had simply exhausted itself with its insane participation in the world wars and could no longer maintain its empire. Britain’s ideology did not change, but reality stepped in: it simply did not have the capacity (wealth) to fund a world-wide empire. It had squandered its resources and men on the battlefields of Europe.
Winston Churchill destroyer of the British Empire
The US is headed in the same direction, which is what both Russia and China are counting on. Its crushing debt burden, costly wars, and out-of-control spending are sapping its productive capacity, which the military industrial complex taps to sustain itself.
The US’ enemies have based their strategies on this. In reference to the US’ involvement in the Afghanistan quagmire, Osama bin Laden reportedly said:
We, alongside the mujahideen, bled Russia for 10
years, until it went bankrupt and was forced to
withdraw in defeat . . . So we are continuing this
policy in bleeding America to the point of bankruptcy.*
Osama Bin Laden
The question that remains is when will a collapse occur or at least another crisis like in 2008 take place? The warning signs abound. The most pressing is the exploding US deficit which has soared in March to $209 billion. In 2007, the entire deficit for the year was less than $200 billion!
The collapse of the US economy is unavoidable, however, it is not “if” but “when.” For world peace, it had better be sooner than later.
*Brian Whitaker, “Al-Qaida is Bleeding US to Bankruptcy, Bin Laden Claims.” The Guardian, 3 November 2004. https://www.theguardian.com/world/2004/nov/03/usa.alqaida
The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronoucements and reversals which will take place in the coming months/years as the world’s reserve currency continues to be compromised. So far, the Greenback has had its worst start since 1987, the year of a major stock market reset.
The brief firestorm was set off by Treasury Secretary Steven Mnuchin who said in response to the dollar’s recent slide, “Obviously, a weaker dollar is good for us, it’s good because it has to do with trade and opportunities.”* Mnuchin backtracked a bit as international financial leaders criticized the apparent shift in policy while Administration officials sought to clarify the Secretary’s remarks. President Trump weighted in on the matter saying, “Ultimately, I want to see a strong dollar” and added that Mnuchin’s comments were “taken out of context.”
While President Trump sought to allay jittery currency markets that monetary policy had not changed, candidate Trump supported the Federal Reserve’s suppression of interest rates and did not want to see a rising dollar:
I must be honest, I’m a low interest rate
person. If we raise rates and if the
dollar starts getting too strong, we’re going
to have some very major problems.**
Of course, the entire uproar about a strong dollar versus weak dollar is a sham. When the dollar (and for that matter all other national currencies) cannot be redeemed for either gold or silver, it is inherently “weak” and ultimately worthless. That this obvious fact is not recognized by the Trump Administration, international monetary authorities, and the financial press demonstrates just how unstable the dollar and world currencies actually are.
If President Trump truly wants to see a strong dollar that will become a linchpin in “making America great again,” he should enact policies that will return the dollar to its original function – a warehouse receipt that can be redeemed for precious metals. Just as important, an authentic strong dollar policy would mean that no dollar can be created that did not have “an equal amount” of gold/silver in bank vaults – in essence a 100% gold dollar. These two acts would guarantee a strong dollar and insure that the dollar would remain the world’s reserve currency. Moreover, a fully redeemable dollar would likely lead to other nations adopting similar measures.
A gold-backed dollar would also head off China’s not too subtle attempt at replacement of the Greenback with the Yuan as the world’s reserve currency. Its “Belt & Road Initiative,” its massive accumulation of gold, and other actions are all aimed at making the Yuan the dominant world currency which, if successful, will have catastrophic financial repercussions for the US and Western Europe.
Gold-backed money will not only have positive international effects, but domestic benefits as well. Crippling price inflation that has been intentionally under reported by government statistics will be a thing of the past. Prices in a gold-backed currency will actually fall, raising living standards for everyone.
Without the ability of the Federal Reserve to create money out of thin air, the massive federal budget deficits would have to be dealt with. And, without the Fed’s purchasing of US debt, the government would be forced to make cuts in spending. Spending cuts would have to be deep and across the board.
Happily, under such a scenario, reduction in spending would mean a pull back in the American Empire. The US would simply not have the resources to maintain bases abroad or involve itself in the countless conflicts and wars it is now engaged in. It is more likely that when the American Empire comes to an end, it will not be because of a military defeat, but because it can no longer be sustained financially.
Sadly, under current ideological conditions, a return to gold money is not on the financial horizon. It will most likely take a collapse of the irredeemable paper monetary system before commodity-backed money is re-established as a general medium of exchange.
It is clear from the recent exchange among Trump Administration financial officers that the same dollar policy will continue, which will lead to an inevitable dollar crisis and certain political disaster for the President.
* “Trump Wades Into the Currency Uproar, Favours ‘Strong Dollar,’ Government & Economy.” Brit Asian News 26 January 2018. http://britasiannews.com/en/2018/01/25/trump-wades-into-currency-uproar-favours-strong-dollar-government-economy/
**Inflation Alert: Trump Also favors Low Interest Rates, Weak Dollar.” Weekly Market Wrap. 6 May 2016. https://www.moneymetals.com/podcasts/2016/05/06/trump-supports-weak-dollar-000864
Not surprisingly, the purported head of the Catholic Church, Jorge Bergoglio, a.k.a Pope Francis, has ushered in 2018 with another denunciation of those who want to preserve what is left of Western Civilization. In a New Year’s address that the Church now calls “World Day of Peace,” instead of the traditional feast day of the Circumcision, Bergoglio once again labeled those who want to curb the coercive migration of Third World peoples into Occidental cultures as “sowers of violence,” “xenophobic,” and they “racially discriminate.”*
Francis continued his criticism of immigration opponents as being “guilty” of “demeaning the human dignity due to all as sons and daughters of God.”
A reality check is in order for Francis: the vast majority of migrants are Muslim who are mostly young males. They are not “sons and daughters” of the Christian God and would be, to say the least, a little bit offended as being categorized as such!
Of course, for those who actually pay attention to this cretin, this is nothing new. Since the beginning of his abominable “papacy,” Bergoglio has repeatedly pushed far-out left wing and green causes. What is worse, however, is that Bergoglio is a heretic who has uttered a mind-blowing string of heresies that have disqualified him from being pope of the Catholic Church. Not only has he demonstrated beyond a doubt that he is a heretic, but he cannot be pope on theological grounds. The Argentine Apostate was ordained in the invalid post-Vatican II orders which confer no sacramental grace. He is not a true bishop either since he also was consecrated in the new rite. Bergoglio is simply a layman masquerading as a pope.
Nevertheless, “Pope Francis” has been cheerleading for even greater amounts of immigration, excoriating anyone who opposes him suggesting that such thoughts are “sinful.” He has used the Chair which he illegitimately sits in both an immoral and unhistorical fashion.
In case Bergoglio is unaware, the popes were the main bulwark against the repeated Muslim attacks upon Christendom in the past. It was the popes that encouraged and inspired the Western princes and powers to take up arms and repel the Mohammedans and reclaim Christian territory, most importantly the Holy Land during the Crusading era. Had it not been for the popes, Europe may have already been overrun by the Infidel or at least had most of its lands compromised.
While it is imperative that enemies of the West of the likes of Bergoglio should be rebuked and, if possible, removed from their positions of power, mass migration opponents must likewise address the demographic nightmare that Europe faces. European birth rates have fallen to unsustainable levels and if trends are not reversed, Western man is headed for extinction if not marginalization in global affairs.
Declines in native European birth rates stem from factors both economic and cultural: (1) real income have continually fallen in the West which has now required many women to enter the workplace in greater numbers to offset the decline; (2) the Establishment has vigorously pushed the idea of women in professional roles and the nonsensical idea of “working mothers.” Women working during their most fertile years would naturally decrease the number of child births. There are, of course, other cultural factors – divorce, contraception, abortion – that have effects on low birth rates, all of which need to be taken in account before there can be a return to a more populous European Continent.
Foreign policy has contributed to the migration crisis. The US policy of regime change in Iraq, Libya, and its attempts to do so in Syria and now Iran has dislodged millions, making it easier for the powers that be to orchestrate their coercive mass migration schemes.
There can be no compromise on mass immigration, the future of the European peoples and their glorious past accomplishments hang in the balance. While the enemies of Western Civilization such as “Pope Francis” want to eradicate this legacy, there is still significant numbers that understand the importance of preserving its past and the promise of its future.
For those who seek Western man’s survival, the heroic attitude of the Roman statesman, Cato the Elder, should be adopted who, after every speech, called for Rome’s lethal enemy’s destruction, “Carthago delenda est.” Hopefully, the proponents of mass migration will share the same fate as the Carthaginians did.
*Thomas D. Williams, “Pope Francis: Opponents of Mass Migration Sow ‘Violence, Racial Discrimination and Xenophobia.'” Breitbart. 1 January 2018. http://www.breitbart.com/national-security/2018/01/01/pope-francis-opponents-of-mass-migration-sow-violence-racial-discrimination-and-xenophobia/