Gab@StFerdinandIII - https://unstabbinated.substack.com/
Plenty of cults exist - every cult has its 'religious dogma', its idols, its 'prophets', its 'science', its 'proof' and its intolerant liturgy of demands. Cults everywhere: Corona, 'The Science' or Scientism, Islam, the State, the cult of Gender Fascism, Marxism, Darwin and Evolution, Globaloneywarming, Changing Climate, Abortion...
Tempus Fugit Memento Mori - Time Flies Remember Death
Inflating your way out of debt obligations is standard practice by nation states. It is probable that the US political and central banking elite are following this policy. Inflationary growth will artificially inflate the value of the US economy and its tax revenues, while decreasing the nominal amount of actual dollars to be paid back. Inflation will thus be viewed as a 'positive' by these self-interested actors. It sure beats austerity, cutting spending or having an intelligent fiscal and monetary plan.
If we were to strip out real inflation from nation state GDP numbers, it is clear that most national economies have not grown at all in the past 4 or more years. This is one reason amongst many why you should be very skeptical of 'government estimates' of GDP and economic growth. GDP itself is simply a very crude spending algorithm which has little real connection to how a modern economy actually functions.
John Maudlin's excellent newsletter depicts the dangers of inflation as the policy tool of choice to wish away, and pay away, the profligate and destructive debt. Keep in mind as well, that the public debt of $15 Trillion is the small problem. The greater issue is the $150 or so Trillion in unfunded, off the balance sheet liabilities and promises made by politicians to future welfare state clients. There is no possibility of paying off this accumulated unfunded debt unless you try to inflate your way out of it. Once that choice is made rampant inflation, high unemployment and real economic contraction ensue.
“Now, to see this in an interesting graph, the Fed has real GDP based on 2005 dollars. You can see that we are about back to where we were in 2008, prior to the crisis, and growing well below trend. But if we adjust for inflation, growth has not been close to what it was in nominal terms.
Now let’s run through a few “what-if” scenarios. What if the next 11 years look more or less like the last, with 4% nominal GDP growth? That would mean that in 2022 nominal GDP would be 50% larger than now, right at $22.5 trillion. But that is with only 2% inflation.
What if inflation were 4%, with the same growth? Then nominal GDP would be $30 trillion! What a roaring economy, except that gas would $8 a gallon (assuming current levels of supply and demand). In essence, you would need $2 to buy what $1 buys today. Don’t even ask about health-care costs. If your pay/income did not double, you would be in much worse shape in terms of lifestyle. That is the insidious nature of inflation.
But let’s think about that from a federal budget perspective. Let’s assume we get 20% of GDP in federal tax revenues, which is roughly a little higher than the historical average. That means total tax revenues would be in the range of $6 trillion. With 2% inflation, revenues would be just $4.5 trillion. If the federal government froze its spending at current levels for 12 years (no inflation adjustment), we would be running large surpluses under either scenario.
Higher inflation means US debt is easier to pay back, as nominal GDP is what we pay taxes on, not inflation-adjusted. Inflation is a tried and true method of dealing with too much debt. Inflation is also just another word for default, but it sounds so much better to the ear.”
The US has only two choices – inflation or default. The political landscape in the US is so disfigured by unions, leftists, green-communists, public pension earners and the assorted rag-tag of anti-realists that cutting spending and taxes; and reducing government are non-options. The great, the good, the clever will never allow it.