pull down to refresh

The price trend across the board is at an inflection point. If the central banks do indeed embark on a massive easing program to support the crashing economies and pump cheap money into the markets to kick-start the credit engine, then it is very likely that we will experience a second, much higher wave of inflation than we have seen recently. Many commodity prices are currently bottoming out and are likely to rise again massively when China in particular starts to hoard commodities again.
Weak currencies such as the euro, which are backed by nothing but consumer confidence, will then have less and less buying power to import what their economies need most: Energy and commodities. It would be a chance for Americans to prop up the dollar if a sensible government then introduces immense austerity measures and normalizes bloated budgets.
In this episode: Reserve Bank of New Zealand & Inflation with Don Brash I talk with former a Central Bank Governor about his work to lower inflation in New Zealand the 1980s which was running very hot off the back of the 1970s.
We go into some interesting takes on where this came from and the ideology of governments of the time about the causes of inflation.
reply
Thank You. Very interesting
reply
New Zealand is another tribute state to US monetary and military empire. As Governor of the RBNZ Brash oversaw the sale of NZs mutually owned banks which previously provided nearly all housing mortgage finance, to US shareholder majority owned banks, which now extract a higher ratio of NZs GDP as profits than any other OECD nation. The US majority shareholder 'Aussie' banks control over 80% of the NZ banking sector and have the worlds highest ratio of housing mortgage debt at over 60% of total lending. Brash does not seem to understand that the neoliberal reforms he took part in resulted in huge ongoing wealth extraction based on a fundamental misuse of fiat debt issuance. Allowing commercial banks to issue fiat debt finance toward non productive housing mortgage finance has driven housing costs up and created growing inequality and a huge drag on productivity. The US owned banks own the current NZ government, the current PM being the hand picked nominee successor to the previous PM who immediately upon resigning assumed the role of chairman of the largest US controlled bank, the ANZ. He previously worked for BoA before entering politics where he engineered multiple opportunities for the banks to increase their wealth extraction form NZ. Perhaps nowhere is the infiltration, undermining and corruption of our democracies by rentseeking bankers more clearly evident than in NZ.
reply
To get this huge red pop it is not a question of monetary supply anymore, it is a loss of confidence in the currency. Huge interest rate saved the USD in the 1980s, not sure what can save it now with such a high level a debt. Still probably better than all other paper money but it will keep devaluing against real stuff
reply
USD is highly dependent upon the imposed need for all central banks to hold USD in order to participate in the SWIFT payments network. With China now increasingly provisioning trade payments independent of SWIFT and USD there is a real possibility that the USD collapses and the Chinese CBDC Yuan becomes the dominant fiat currency. After all how many nations can afford not to trade with China?
reply
correct. but from my life experience, for example, I can tell you that I have never heard anyone here in Europe doubt the stability of the euro, a currency that is not clearly going down the drain. here, for example, there is no significant Bitcoin adaptation at all
reply
Europeans can kid themselves about their Euro but in reality is Europe not both monetarily and militarily a subservient tribute state to the US?
reply
To UK/US
reply
Yes. But now the mercantile power that Britain and US once held is held by China and its modern day silk road, Belt and Road is the new trade infrastructure empire Europe may end up reliant upon. The US/UK still control the legacy fiat banking institutional hegemony, but without trade dominance that is increasingly fragile. As for the US/UKs legacy military dominance - that is increasingly frayed as Chinas proxies Iran and Russia attack Ukraine and Israel.
reply
We need a territory on 'geopolitics' here on SN
reply
The alignment of monetary and military power structures is significant.
reply
21 sats \ 1 reply \ @TomK OP 3 Sep
You're right. It's the center part to understand what's going on, even btc.
And imagine the fights we would have here
68 sats \ 1 reply \ @joda 4 Sep
This graph uses a different scale/Y-axis for each one, to make them line up?
reply
Same scale, different base level of inflation to illustrate the similarities
reply
I'd say yes because of the lines similarity. But history has taught us that there are no equal situations, yet different situations can lead to the same result. Only time will tell if we are following the path of 1970.
reply
47 sats \ 1 reply \ @Carresan 3 Sep
It scares me the resemblance of both lines !
reply
that's more than just scary when you consider the wave of inflation we already have in our bones, which is hitting the purchasing power of households. but they'll use the inflation effect to try and squeeze out the last of our purchasing power.
reply
Inflation soaring and traditional currencies struggling, the same old story, the only solution now is BTC, which could become a more reliable store of value. Will governments finally realize that it’s time to truly embrace it?
reply
Governments can stop it anytime by balancing their budget and spend more responsibly. Bitcoin was created with the thinking that it would never happen
reply
47 sats \ 0 replies \ @jddska 3 Sep
Much worse now, debt debt debt over debt everywhere, the printer must work harder this time
reply
Must. Stack. Faster.
reply
47 sats \ 0 replies \ @OT 3 Sep
I think its likely.
reply
I think this cycle will be very similar to the one in the 70s... Because at the end of the day, with the increase in liquidity only the poorest will be affected, those who run the economy and have access to risk capital, will deposit that liquidity in assets and these will rise even more, benefiting the holders of hard assets, and crushing the common people who live month to month.
reply
"The cure is worse than the disease" is what they say where I live when they try to fix a problem with a solution that only makes the initial situation worse.
We could apply the concept of stupidity: when you try to obtain different results, using the same techniques and/or procedures.
Inflation, caused by high money emission and not by shortages of products, is only solved by collecting the surplus money, or the price of products increases or interest rates rise. Then there are still problems because the purchasing power of printed money falls. And so on and so forth.
reply