(Prof St. Onge)—A key justification of the Fed — of Keynesian central banking — is that the way to make an economy grow is to print money. This is the “Philips Curve” — a tool that claims a trade-off between unemployment and inflation.
In that model, if you want economic growth, you print more money. If you printed too much and got inflation, you just print less. Typically by raising interest rates so banks create fewer loans.
The punchline, of course, is that central banks should print as much as possible, all the time. After all, if printing money creates prosperity, everybody wants prosperity. And then, when prices rise from all that printing, you just beg, borrow and steal to calm pesky voters down enough to get back to printing.
Of course, for non-Keynesian economists — Austrians and free marketers — it’s a lot simpler: money-printing is counterfeiting. And, like all counterfeiting, it steals from everybody else’s dollar, pouring water into the wine of their life savings. With a kicker for economic distortions — recessions — caused by how the new money was printed.
The “Inflation is Prosperity” Fallacy
The inflation-is-prosperity fallacy has been internalized by the ruling class. For example, whenever I advocate sound banking — where the bank actually has the money in the vault — I get attacked by Wall Street types complaining that if banks couldn’t counterfeit via fractional reserve, the economy would freeze up.
So where does it come from? Simple: it’s confusing activity and wealth. To illustrate, if Hunter Biden prints a million dollars and hits Vegas for the weekend, there will be a lot of very busy strippers. It’s be fantastic for the Las Vegas economy — tissue-fire level economic growth, an extra million in GDP in however many hours Hunter’s high lasts.
Of course, where did the money come from? It was siphoned from every other dollar holder. Diluted like water into wine. So grandma pays a little more for groceries, but at least Hunter had a hell of a weekend. Activity was created, wealth was not. And all that was left was the theft.
“Helicopter Money” and the Wallet Fairy
Now, there is a way around the theft, first proposed by Milton Friedman in 1969: “Helicopter Money.”
The idea is find some way to print money into the economy without distorting it. Milton used the image of a helicopter flying over the city dumping money.
Of course, even that distorts — if you happened to be walking on 2nd Avenue Thursday afternoon and the helicopter flew by you’re the new elite.So the closest government get is stimulus checks — which have the added bonus of buying votes.
Alas, even stimulus distort: the young and irresponsible spend fast — bubble tea sales take off and stripper work exra shifts. While the old and prudent save and get richer in future.
Fortunately, we have an elegant little thought experiment that we can test the whole idea whether printing money makes us rich: the Wallet Fairy.
This little critter sneaks in to every bedroom, bank vault, and payroll department across America on December 23 — the founding of the Fed — and draws an extra zero on the money.
So you went to bed with $10 in your pocket and wake up with $100. You laid down with $1,000 in the bank and woke up with $10,000. You went to bed making $12.50 as a customer associate at Best Buy, now you make $125.
Perfect helicopter money. So are we rich? Does the customer associate upgrade his house?
Of course not. Because everybody can see what happeend. Houses aren’t $400,000 any more, now they’re $4 million. Bubble teas are $50, rent is $15,000, strippers are too much. It would have absolutely zero impact.
We actually have proof from similar situations in countries that did the opposite, knocking zeros off the money. Mexico in the 1990’s, for example, lopped 3 zeros off the peso. So a dollar didn’t buy 3,000 pesos, now it only bought 3.
What happened? Nothing. Everybody adjusted overnight. A 5,000 peso coffee was now 5 pesos and nobody was dumb enough to think they got rich.
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Unfortunately, in the real world, inflation is never so obvious as adding a zero or lopping off 3. In the real world inflation does, in fact, change things: Wages are slower to adjust than groceries, long-term contracts get effectively cancelled, pensions get gutted. Cantillon Effects divide every single person into winners and losers, draining those who have worked hard to build something of value, while rewarding those who did not.
Conclusion
Every inflation carries within a million human tragedies, a million dreams lost, a million life’s works squandered.
But the first step is understanding that printing money itself doesn’t create anything. Its one alleged benefit — the tissue fire — is a lie, an illusion that serves the politicians, bureaucrats, and lobbyists who, in reality, are aiming for the very redistribution inflation delivers.
Final point, the theft is only half the harm from money printing. Because, in reality, almost all new money comes in via asset markets, interest rate manipulation, and the privileging of bank credit over actual savings.
I’ll talk about these another week, but they are the source of our clockwork recessions — each delivering trillions in destroyed value and millions of jobless workers — of the permanent financial crashes that now stalk the American people, and of our exploding national debt.
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Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
