Source: Alt-Market.us
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?…