Of Two Minds – What’s Worse Than Inflation? Depression + Inflation

August 24, 2022

If “markets” controlled by the rich are allowed to distribute essentials, the result will be civil disorder
and the overthrow of regimes.

What’s worse than inflation? Depression + Inflation. And that’s where we’re heading. As I explained
yesterday in
The Fed Can’t Stop Supply-Side Inflation, central banks are trying to reduce inflation by crushing demand.
This works in eras of abundance, but not in eras of scarcity in which supply constraints drive inflation.

If the FEW essentials–food, energy and fresh water–are supply-constrained, monetary tightening won’t reduce
inflation. Jacking up interest rates to crush demand won’t increase supplies, it only exacerbates the
destabilizing inequality of who gets their fill (the rich) and who doesn’t (everyone else).

Food shortages caused by drought and other extremes of weather don’t stop humans from getting hungry, and neither
do central bank-created depressions.

And Depression is what we’ll get if central banks continue pursuing their fatal misdiagnosis of the cause
and fix of inflation. Central banks can trigger a Depression by jacking up rates and tightening financial
conditions, but this won’t put an end to humanity’s needs for the essentials soaring in price due to scarcity.

Central banks crushing demand won’t reduce wages, either, as workers need a living wage or there’s no point
in even showing up. After 45 years of losing ground, the worm has finally turned.

The highly unpopular (and misunderstood) solution to supply-constrained inflation is rationing so everyone gets
enough to get by regardless of their wealth or income. Without rationing, the rich and powerful engorge themselves
as usual, soaking up scarce supplies with their wealth. Those without wealth do without or are pushed into
insolvency, generating civil instability that will eventually threaten the integrity of the entire system the
wealthy control with such self-satisfaction.

Rather than cut off the water to the poor who are unable to pay soaring utility bills, it’s the wasteful
rich who should be cut off and fined a couple hundred thousand dollars for squandering resources.

If central banks think causing a Depression will reduce supply-constrained inflation, they will be proven
tragically wrong. Depletion and scarcity are not temporary and the central bank “solution”–impoverishing the
already poor and laying waste to the economy to reduce demand–won’t actually fix supply constraints caused by
forces beyond the reach of financial manipulations.

If “markets” controlled by the rich are allowed to distribute essentials, the result will be civil disorder
and the overthrow of regimes by those left bereft while the wealthy squander resources because they have the
financial means and political power to do so.

What’s worse than inflation? Depression + Inflation. What’s worse than Depression + Inflation?
Depression + Inflation + civil disorder triggered by mass impoverishment and wealth inequality.

Recent podcasts/videos:

Save Money On Food, Get Free Gold & Silver, Beat Price Inflation (1:08 hrs)

It’s Time To End The Fed & Return To A Decentralized Currency (X22 Report, 38 min)

Charles Hugh Smith On Inequalities And The Distortions Caused By Central Bank Policies (FRA Roundtable, 30 min)

Tectonic Shift of Mercantilism Revalued (Gordon Long, Macro-Analytics, 42 min)

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