The Insanity Of Pushing Inflation Higher When Wages Can’t Rise


Zero HedgeThe official policy goal of the Federal Reserve and other central banks is to generate 3% inflation annually. Put another way: the central banks want to lower the purchasing power of their currencies by 33% every decade.

There is a core structural problem with engineering 3% annual inflation. Those whose income doesn’t keep pace are gradually impoverished, while those who can notch gains above 3% gradually garner the lion’s share of the national income and wealth. more …

Opinion: The reason for all the confusion is central bank intervention in the 2008-9 mortgage crisis.

The Fed interfered with the normal business cycle. The Biblical principal of 7 years of plenty and 7 years of drought (Genesis 41:28-29) was interrupted by the largest financial experiment in history.

For the first time, money was created to bail out “too big to fail” banks and automobile manufacturers. In a normal cycle, the US economy likely would have suffered a depression. Banks that mismanaged their accounts would have filed bankruptcy, as would have auto companies that paid workers three times what foreign competitors were paying.

Those companies would have emerged from bankruptcy leaner and with new management.

Don’t get me wrong, the pain would have been intense. Unemployment would have skyrocketed and the US and every major economy would have suffered a 1930’s style depression.

The fault would have been placed where it belonged, at the feet of government progressives from both sides of the political isle for forcing banks to loan money for houses to people that could not afford them.

The toxic mortgages were packaged with good mortgages into government agency bonds rated AAA and sold to institutions all over the world.

Now we have debt like never before. Now we have politicians who are more unconcerned with spending and tax cuts like never before, and now the Fed wants inflation.

Deja vu.

In the late 1970’s economic growth was weak and the banks had an easy money policy designed to create full employment. The chart below shows how inflation can get out of control when banks manipulate the economy:

Image result for chart showing 1970's inflation

The next chart shows hyperinflation in Germany 1921-23.

It comes suddenly like Revelation 6:5-6 which follows 2 Thessalonians 4:16-18.