I like to periodically remind any readers I may have that inflation is wealth transfer. It only results in actual price increases when it enters circulation.
Many, many commentators keep saying we are on the verge of hyperinflation. I don’t see it. What people have to grasp is that in Weimar Germany, the government controlled money production. Same in Argentina, and modern Zimbabwe and China.
Our government does not control money production. Theoretically, all excess money they spend is borrowed, so it already existed somewhere.
The hyperinflation of the 1970’s was, in my view, created by the Fed with the intention of getting increased freedom of action. They got it. Prior to 1980 or so, the Open Market Committee could only buy US Treasury bonds, as I understand the matter. After that–in the name of getting the “tools” to control inflation–they got carte blanche, a platinum diamond credit card with no limit that never needs to be paid back.
Bernanke and his cohort vote, say $100 billion in spending. They write a check to JP Morgan for half that, and the other half to Goldman Sachs. These groups had been holding US Treasury notes as a port in an economic storm, but now want to expand globally. They are able to sell the notes at whatever the Fed, which is them, is willing to pay–remember nobody audits these transactions, so there is absolutely no need to fear accusations of collusion–and then take that money and spend it anywhere they want.
We will only get inflation in this country if they choose to spend it here. My guess is they are buying up Japan at the moment, swathes of India, Singapore, Malaysia, Thailand, or whatever else floats their boat. You get this huge, global transfer of wealth, and it is largely invisible. Nobody tracks them. Nobody can track the nexus of interaction between the Fed–which they control–and the member banks.
To be clear, the head honcho at JP Morgan sits–or sat–on the very committee that votes money for his bank. This is patent conflict of interest, but no law prohibits it. This is utterly and completely ludicrous.
When leftists tell us that “Wall Street” controls whatever, say 70% of our national wealth, this is the mechanism by which they do it. I have made this point repeatedly, and will continue to do so. For any new readers I may have, my series on this topic is here: http://www.goodnessmovement.com/Page14.html
Marx liked to call “capitalists” parasites: they were supposed to benefit without effort from the work of the actually laboring class. This was stupid then, and is stupid now: someone had to create the factory, staff it, and run it. Someone has to decide what to produce, and how much, and where to sell it. All of these things have to happen. They have to happen in Socialist economies and in Capitalist economies. The only question is if these problems will be solved competently or incompetently. It would seem hard to find a better means of getting it done right than to personally motivate the people making the decisions, something which is absent in Socialist systems, in which mistakes are not punished, and in which sinecures for the inept are the rule.
Capitalists, as a class, then, provide a needed labor and service. The people who are the actually parasites are those who create money from nothing. By so doing they claim ownership of the products of other peoples labor, but add nothing of value of their own. This is morally wrong, leads to diminished income for most of the people, and needs to stop.
Hopefully this is clear enough. I am the only person saying exactly this, this way, that I know of. Please ponder what I am saying. I have thought this through with as much care as I could, and gone to great pains to expose myself to criticism, which has been slow in coming. The only critiques I’ve heard have been based on complete misunderstandings.
I have said before and will say again that the right and the left need to make common cause on this issue. If they object to the accumulation of great wealth, so do I, to the extent it is the result of unearned income. I have no problem with Bill Gates, or Warren Buffet. My problems are with the people you have not heard of, like Jamie Dimmon , who himself is no doubt just a front man for people’s whose names some could guess, but which we really don’t know.
If you think about it, we have no way of knowing with certainty that $100 billion or more of the latest round of money printing didn’t end up in an individual’s pocket. How would we find out? We have no idea how much money was created, or where it went. Again, this situation is patently farcical. No serious economist should fail to see this.