By Brandon Smith
One of the most dishonest games being played in economics today is the attempt by various groups (political and financial) to deflect blame for the rise of inflation. The Biden White House and Democrats desperately want to blame Russia and the war in Ukraine, even though inflation was spiking long before the war ever started. The Federal Reserve pretended for years that inflation was not a threat at all despite numerous alternative economists warning what would happen. Now they blame supply chain disruptions instead of their own monetary policies. The GOP wants to blame Biden alone for the crisis while ignoring the dominant role of the Fed in the economy (and their unilateral power) over the course of multiple presidencies.
In the alternative sphere there are some people that try to deny the fact that there is more than one type of inflation. They want to claim it’s all about money creation, but this is simply not true. There is inflation in money supply, but there is also price inflation caused by numerous factors including bottlenecks in production, bottlenecks in resources, bottlenecks in shipping, bottlenecks in energy, etc. Anyone that denies this fact is blinded by bias or just doesn’t understand how inflation really works.
Overall, it’s fair according to the evidence to put MOST of the blame on the central banks and their 14 year program of bailouts and QE policies. If you have read my previous articles on the Fed’s involvement you know that my position has remained the same for years – I predicted a stagflationary crisis based on the position that that the Fed was deliberately creating a monetary disaster to make way for a new digital currency system tied to a global framework, and this is exactly what has happened so far.
That said, too much money chasing too few goods is not the only problem we face as a nation. There is also the issue of global interdependency and our reliance on other countries, some of them hostile, for production and resources. With supply chain disruptions an ever present danger, it’s not enough to focus on money velocity and the central bank alone – We won’t be solving the crisis that way.
Not to mention, the more the federal reserve raises interest rates the more it costs to support US government debt, which is already well beyond US GDP. If doubts rise over the US being unable to pay for its treasury debts, then foreign creditors may dump their T-bond and dollar holding entirely. This could destroy the buying power of the dollar.
In the liberty movement there is always debate about solutions. We all seem to agree on the core problems but can’t ever seem to agree on what to do about them.
There are those that suggest there’s nothing that can be done economically except prepare and wait for collapse so we can rebuild once the dust has settled. I find myself in this camp more often than not. Then there are those that believe a political approach is possible. After nearly half the states in the US blocked the covid mandates and lockdowns, I am starting to think solutions at the state level might be viable. Then there are those that want to build an alternative system, a parallel economy that competes with the mainstream economy.
This is something I have discussed for a long time – It’s the reason I started Alt-Market 12 years ago. It’s the ideal solution because it is proactive. Instead of waiting around for other people to fix the crisis for us, regular people simply establish their own trade and production systems based on necessities, separating from the dying economy so that when it collapses they are mostly unaffected.
This, however, is a short term solution in that large scale domestic production is eventually needed to return a country and economy to greater prosperity. Growing gardens, making trade items and forming local barter markets is only a way to weather the storm; it is not a long term path to fiscal health. What we need is locally based large scale production of necessities as well as our own domestic resource discovery.
In order to fight back against monetary decline the US needs to produce a majority of its own goods again. If the problem is too much money chasing too few goods, then we can make our own goods here at home instead of relying on countries like China and the unstable global supply chain.
But what if there is an answer beyond domestic production alone? What if we built an economy which focuses on QUALITY? It’s a notion that might have been suggested by others, but it is certainly not being promoted by any economist within the mainstream or any political representative.
The Quality Economy As A Means To Fight Inflation?
Consider this for a moment: What if home based producers were given incentives by states (such as a jubilee on taxes) to manufacture high quality long lasting goods? There are multiple reasons why this model is not being used, all of them faulty.
Carbon control initiatives in the west are actually forcing companies to produce lower quality goods with substandard designs in the name of “saving the environment.” But, if products are low quality and are breaking sooner because of carbon control standards, then people have to go out and buy replacement goods sooner. More retail demand means more manufacturing which means more “carbon pollution” over time. The carbon emissions narrative is complete nonsense and there’s no proof whatsoever that man-made carbon causes climate change, but even by the logic of the carbon lobby quality production makes more sense for the environment. At the very least it means less waste.
Remember when a washing machine used to last for many years? Remember when a lawnmower or a chainsaw was made from quality metal parts instead of being loaded with plastic parts? Remember how grandma had the same working vacuum for decades? Quality used to be a thing, but the idea has been erased from modern economic theory.
Today, it’s all about quantity, because quantity makes a bigger profit (as long as prices remain low and people have the money to buy multiples of an item). If items break constantly it means they need to be replaced constantly, which means companies make more money. In fact, there are many corporations that deliberately design products to break quickly so that consumers must buy another. This method does not work in an inflationary environment; it actually adds to the problem by forcing more money velocity and reducing the number of functional goods in the system.
Let’s say that instead we had numerous manufacturers that operate within the US and they are offered a tax jubilee for as long as they are willing to produce high quality long lasting models of their products. With the tax incentives, they could market such goods at a lower price in order to compete with poor quality goods from places like China. Now, you have given the public access to items that they only need to replace every 5 years, or 10 years, instead of every 12 months.
But what about food, which is a major part of the inflation problem? Well, the federal government actually pays farmers to grow LESS food in order to keep prices higher on commodities markets. Why not simply stop doing that? Or, again, states could offer tax incentives to farmers that produce with the effort to drive down prices, and state governments could offer to buy excess long term foods like wheat as a form of strategic reserve. America used to do this; why don’t we do it anymore?
And how about housing? Simple – Ban foreign purchases of property and only allow American citizens to buy American land. American citizens have a right to private property under the constitution. Foreign investors and governments do not have that right.
The goal of each of these policies would be to free up supply without killing the buying power of the dollar and without deliberately crushing credit markets and triggering mass job losses.
In this environment money velocity slows down and there are more goods on the market because they last longer. Savings go up because people don’t need to spend as often. Prices in general start to go down. Inflation is subdued and eventually defeated, because what is money other than a means to provide necessities and amenities? If those goods last longer then money becomes less relevant to the health of the economy.
What about deflation? Would high quality production lead to far less sales and a big drop in jobs? In America’s current 70% service-based economy, yes, for a time. But, this is going to happen soon anyway as the Fed hikes rates and stifles access to credit. With my plan, service jobs would be exchanged over time for better paying manufacturing and engineering jobs.
To be sure, there is the argument that quality goods and more savings could lead to decadent spending. In other words, there is the theory that the more money people have the more they will spend on frivolity and this might keep inflation alive. The problem is we have not lived in an economy based on quality for several decades, so it’s hard to say how people will react. If people have long lasting items and are secure in their basic necessities, then what is compelling them to spend with wild abandon? Not much.
The establishment would like to keep the public dependent on the system by reducing our buying power and controlling access to goods. I suspect that they will one day offer the same kind of solution – A return to quality. But only at the price of subservience. The World Economic Forum’s “Shared Economy” concept which they clearly plan to introduce after there is a major financial collapse would require quality based production, other wise it would fail miserably. If everyone in the world is going to be sharing everything and private property is outlawed, then the goods that are shared would have to be designed to last.
My suggestion is that we circumvent the establishment entirely and create our own economic model, still based in private property but also adapted to quality production. And, we manufacture all our goods locally within our own states and our own country. I believe this would end inflation, not just today, but for all time.
Will the establishment allow such a system to thrive? They would certainly try to stop it from happening using any means they have available. Decentralization and abundance are the enemies of authoritarianism. My point is, there is indeed a solution. We don’t need Fed intervention. We don’t need sky high interest rates. We don’t need stimulus. We don’t need government oppression or foreign interventions. We don’t need globalist centralization or a Great Reset. We don’t need any of it. They will try to convince you that we do.
Regardless of what happens the public must be made aware that there is a better way.
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Someone will correct me if I’m wrong, but isn’t the ultimate supply chain bottleneck the computer industry? If there was a disruption, how much could we get along without computer chips? Could some industry get built up without them? How long would it take to restart this industry?
Not for most necessities, but for almost every other product out there, yes, computer chips are vital. We used to make them here in the US, but not so much anymore. The majority are made in Taiwan.
Hi Brandon thank you for this artcle. “They will try to convince you that we do.”
World Economic Forum Declares Pedophiles ‘Will Save Humanity’
https://newspunch.com/world-economic-forum-declares-pedophiles-will-save-humanity/
The problem I see with making things last longer and why it won’t happen is that as Brandon says, things slow down. These companies build stuff on purpose so they break and sell you a new item. This in turn creates or maintains jobs. In order to keep 8 billion people from crashing the castle gates with pitchforks and torches they need to feed their families.
Back when things lasted 30-40 years you have maybe 1-2 billion on the planet. I remember a time when you had repair shops where you could take your toaster to get it fixed and that was 50-55 yrs ago. I remember learning how to fix TV’s down to component level. Now you just buy a new TV. The economy would just crash and burn with workers out of work.
I started a small business servicing power windows and there was a time where the system worked for decades without servicing. In the last 15 years I have repaired vehicles within the mfg warranty or shortly after it expired.
I don’t think it would crash and burn, it would just change. Less service sector jobs and more manufacturing jobs.
manufacturing jobs? Manufacturing requires very real inputs, of which energy is the big one. Now, people with a fundamental lack of understanding in thermodynamics and physics will always say “there is energy everywhere”, and technically they are correct. However, the problem is that this energy is locked away and not CONSUMABLE. Consumable calories, and resources (tremendous amounts) are required to innovate and build real things. The math is what it is, and with over 8 BILLION people, most of whom live in abject poverty, it is what it is. Nature will sort this out, whether we like it or not.
This is nonsense. The US was a net exporter of oil under Trump. The Keystone pipeline would make us energy rich if Biden stayed out of the way. There is more than enough energy in the US for manufacturing – Far more than China. What you are promoting is psychopathic population control propaganda.
Brandon addresses the concern that some economic activity would slowdown. It might, “ . . for a time.” (think ocean liner). This actually illustrates “the broken glass fallacy” in economics: that repairing a broken window is a good thing, because it generates many layers of activity (i.e. making the new windows, distribution, installation, etc.). The fallacy is that the money the window owner spends to fix the window would have been spent somewhere else, to buy say a new pair of shoes. That action would increase his ‘standard of living’, not restore it to where it was, while generating all of the same layers of activity.
Yeah I’m with Brandon. You’re overlooking the fact that all the components in that old TV were made domestically. That isn’t the case anymore. Part of making quality goods would involve making all of everything here. That’s what would create and maintain the jobs. It would be production at a massive scale. Productivity we shipped overseas long ago. And all the value of our money along with it. We shouldn’t have done that and our government should have never allowed it. The right to produce your own basic goods should be fundamental. Domestic goods should be able to compete in their own domestic marketplace, not be priced out by cheap dumped goods from the third world. Our failure to protect American WORKERS (the corporations are doing fine) set a lot of this in motion. Having these jobs available again would help remedy that too. These are the core values of a Nation. We’ve had them replaced by the core values of profit seeking, rent seeking global multinationals. That’s how we got here. It’s all about breaking that model.
Population is irrelevant. If you are building quality long lasting goods and manufacturing domestically there would be more than enough jobs. The reduced service sector would be replaced by the manufacturing sector. At the same time, an economy of quality would SAVE people money and reduce inflation. Remember when you could buy most things in the grocery store for a couple dollars? That is the dynamic we would go back to.
“… the Fed was deliberately creating a monetary disaster to make way for a new digital currency system tied to a global framework, and this is exactly what has happened so far.”
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Gotta make people suffer so we will accept the unacceptable. Like taking toxins into the body for ‘health’. Like wrecking the currency to bring in a much worse and even more fake and damaging ‘currency’.
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Like taking away free-speech rights as ‘dangerous’ and ‘wrong’. Like taking away our rights to defend ourselves (while They hid behind layer after layer of personal security).
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Like perverting our public education systems so that children begin to hate lighter-skinned people and demonize them for ‘sins’ they had nothing to do with. Like legalizing and promoting anti-family lifestyles and traditional values and morals. Like turning our precious, God-given bodies into walking billboards with a dissonant mix of visual blight.
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Like promoting ignorance over competence. Like making kids feel bad for excelling instead of being in the grand incompetent wolfpack of peers.
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Like demonizing half the Nation for liking a certain politician and dragging millions of people into the mud by erasing them and trashing their reputations.
Like forcing competent medical personnel out of the profession for not promoting a genocidal global agenda. Like forcing pilots out of the cockpit for not having garbage injected into their bodies and creating a travel nightmare for millions of families who are still looking for their luggage somewhere in America.
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Like having to watch young men drop on the playing field for taking that same injected garbage.
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“I am starting to think solutions at the state level might be viable. Then there are those that want to build an alternative system, a parallel economy that competes with the mainstream economy.”
This is the only positive way forward. There are lots of alternative ways forward… but none of them have good outcomes.
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“The establishment would like to keep the public dependent on the system by reducing our buying power and controlling access to goods.”
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We are living with and in the results of a failed System. A System that had to fail since it was based solely on greed and general incompetence. A System that was not necessary or one that needed to be but one forced upon us by those only live for personal enrichment and a horrible disregard for other people.
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Don’t go looking or waiting for a Superman. He ain’t coming. We must be one ourselves.
“And how about housing? Simple – Ban foreign purchases of property and only allow American citizens to buy American land. American citizens have a right to private property under the constitution. Foreign investors and governments do not have that right.”
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Hey Brandon, great point. I noticed that generally speaking, in Northern and Southern America, anyone (foreigner or resident) can buy land and housing. However, in Asian countries, one generally needs to be a resident to buy there. If America were to take on that model, I’m sure pricing would come down drastically.
It p$sses me off that Canada’s Trudeau of all people and places passed this:
https://www.zerohedge.com/personal-finance/canada-bans-most-foreigners-buying-residential-property
You guys and gals want a good laugh? Check out this Simpsons episode from 2010 about the pandemic. Tell me it doesn’t mirror the BS being spread around today.
https://www.youtube.com/watch?v=T2F7muYaby0
Great clip. Spells it out very clearly. Too bad the normies don’t see how they fell for it.
LOL. Brandon, your post reminded me of an article that stuck:
https://www.oftwominds.com/blogfeb22/crapification2-22.html
We indeed are a landfill economy.
OT: If I had my say, the first issue I would address is how to stabilize the family. Of course, we also need 1.)honest money, 2.)honest media, 3.)honest elections and 4.)honest rule of law if we are going to have anything to work with at this point. Ain’t happening.
I would immediately cancel all primary home residence property taxes so as to encourage home and family formation. This would help decrease the transient apartment complex population which in turn destabilizes communities. People would get to know their neighbors and organize at the grass root level once again.
The property tax is money wasted on the bureaucracy of the education departments anyway.
I agree. Property tax is tax on wealth that was already taxed when the money you used to buy your property was earned in the first place. In other words, it’s double taxation forever.
Interesting post and pretty much hits home with me. My business is repairing a very specific component for an industry that the general public does not know exists. I have some competition but most of them have not demonstrated the ability to properly work on these items. Truth be told, we are all guessing because the factory that makes them will not disclose any information on how to fix them. You can’t even buy parts. That means we who fix these are on our own.
Taking time to develop a process means production and profit go out the window. It becomes a huge time suck that most can’t tolerate because of massive overhead. In my case I’m so small with extremely low overhead that I can spend the time to get these right. Most end users appreciate the effort and I have a small customer base that will not send their equipment anywhere else. I just hope to maintain a steady course providing some of the best repairs in the industry (as told by end users).
The majority of the industrial world is replacing highly paid skilled labor with high tech equipment that can be operated by low tech people. Fewer manual controls and the ability to override may not even exist. It’s a “green light” “red light” sort of thing. Load the part, push the button, see the result. I have been fortunate enough to work with some amazing machinists and technicians and pick up on techniques that over many years have turned me into a seasoned technician.
So to the point of this article there is a formula that goes something like this: You can have good, fast and cheap. Pick two. Good and fast won’t be cheap. Fast and cheap won’t be good. Cheap and good won’t be fast.
In my area we have a plumbing company who has a great catch phrase printed on all their vehicles. “Good work is not cheap and cheap work is not good”.
I think part of the confusion, perhaps unwittingly perpetuated by the author, is that while there can be more than one proximate cause of rises in prices, there is only one definition of inflation. It is defined as an increase in the quantity of circulating fiduciary media. That’s it.
There can be many reasons why prices rise, but they are not all properly called “inflation”. They are all essentially problems of supply and demand. In fact, even the effect of inflation of the money supply is an extreme example of supply and demand, when you get down to the fundamental principle involved. People choose to acquire tangible assets, any tangible assets, rather than hold currency. This activity automatically bids up prices because everybody is bidding for the same limited pool of tangible assets with the inflated money supply.
Economically speaking, inflation is defined one, and only one, thing – the increase in the quantity of money (usually fiat money) in circulation. I wish the author would not create more confusion by calling something “inflation” when it is not.
For the record, I am not an economist, but I have sought to understand economics for most of my adult life. I simply call things by their proper name. Not every increase in prices is evidence of inflation, rightly defined. But every rise in prices, including the price of money, is evidence that supply and demand are not in harmony.
That is incorrect. There are multiple types of inflation beyond monetary inflation, including:
Demand-pull inflation
Cost-push inflation
Built-in inflation
There is a fallacy being circulated among liberty movement people that monetary inflation is the only “real” inflation. This is simply not true.
Brandon,
I very much appreciate this post. Your thinking is my thinking. I despair over any gradual ballot box fix for current political and economic shenanigans. I fear collapse and then hopefully rebuild. The Republic is lost. I hate saying that. But I’m through fooling myself.
Keep up the good work!
Another great common sense article Brandon.
I think there are two other actions needed to restore fiscal sanity in addition to manufacturing quality products domestically. One is the return to the gold standard and another is a Constritution Al Amendment requiring a balanced budget. I know neither is realistic but how would they work with domestic production?
Mac Slavo from shtfplan.com awhile ago put up an article that said they are planning to inject mNRA vaccines into the food supply. I brushed it off but I recently came across a similar story that the authorizes are looking to inject these vaccines into the food supply for those who don’t want to take them.
It’s kind of like when they put fluoride in the drinking water. If I didn’t know any better it looks like the globalists want to kill us all.
I’m pretty sure they’ve had very limited success with vaccines being absorbed by ingestion with mice. It’s hard to say what would happen with mRNA because the technology has near zero background study and the covid vaccine is the first very used widely on humans. Hormones can be absorbed easily, but vaccines seem like a stretch. I think the original story was about using mRNA vaccines designed specifically FOR farm animals, which could present other problems, including killing off our food supply.
This comment from someone on the Hal Turner site seems to support your idea of state action:
“Its so interesting to me that I was driving around OKC a few months back and made a series of wrong turns. I went to turn around in a discreet gravely side road and lo and behold I saw in front of me a series of working oil rigs. I did some questioning to a few family members who work in the oil industry. Sure enough, OK and TX have been working together pumping and refining their own oil/gas. They have had issues with not enough storage, and they sell excess to AR. This is all under the table. While they are not ashamed of what they are doing they just do not want the grief that the left is sure to bring if word of this gets out. It is keeping our gas prices crazy low. We almost hit $2.90 before Christmas.
My point is – take a guess who is keeping us down and why. Someone is pocketing all the money for themselves. Just saying.”
Brandon as you wrote in a post in february 2017, “Irreversible damage – U.S. economy can’t be fixed”. Indeed, It can’t be.
As we know, the collapse (or controlled demolition) of an empire or system can take several decades and even centuries (e.g. the Roman Empire).
A clip clearly summarizing the disastrous economic situation of the United States:
https://www.youtube.com/watch?v=Zq0Dbi3kilQ
The public must be prepared for this endgame; quickly.
P.s: apparently, Tulsi Gabbard is on the right side.
In 2024: R. de Santis/T. Gabbard? Politically, It could be a good thing.
Who knows?
The goal is not to fix the crashing system, but to build a new alternative system in its place to protect people from complete collapse. This is indeed possible.
Here’s another good article concerning inflation, USD and world economy:
https://goldswitzerland.com/in-the-end-the-goes-to-zero-and-the-us-defaults/
Many factors move prices up and down but do not cause spiraling Inflation. Failure to see the difference causes much misunderstanding and distraction about Inflation. Supply shortages fall mostly into the former category since they reduce rather than increase the available money supply. If that were the only factor there would be no spiral to Inflation. Wage growth follows Inflation moreso than causing it. Profiteering is nothing new. Strip away all of the excuses and the short term movemenevt and we’re left with monetary expansion, governemnt overspending and other Fed actions the main long term causes.
Monetary inflation is one primary cause, but not the only cause, which is the common argument among people who have no understanding of the issue. Also, production supply shortages do not reduce the money supply. The money supply is the same regardless. Overt demand in an economic environment with limited supply or limited production is just as powerful a trigger for inflation as overprinting of dollars. This is not “profiteering” because the profit margins over cost of production and raw materials are actually minimized in most cases. It’s time to accept reality – Money supply is not the only source of our financial problems. It is one of many.
When the money supply doesn’t increase the other factors are mostly fluctuating around the same level not spiraling that was my point. Supply shortages do not increase the money supply and therefore do not contribute much to escalating prices just an increase in current prices. By reducing the money supply I meant people pay more for supplies leaving less money for other things, a minor factor but not inflationary. Profiteering wasn’t mentioned in your article It’s the biden apologists favorite excuse blaming Inflation on price gouging which is pure nonsense.
The money supply doesn’t need to increase for inflation to occur by other means, I think is the bigger point to be made. The Fed pumped up rates and stopped asset purchases, and yet inflation continues. Not just due to the existing money supply, but also the existing production shortages and supply chain chaos. But yes, a common false argument by Biden and the leftists is that corporations are “artificially” creating inflation with price gouging, which is simply false. Its the lack of materials and higher cost of production, an economy built on quantity over quality, along with too many dollars chasing too few goods.