#104 Inflation: The New Normal

Good Morning Everyone,

It’s incredible to see how the tables have turned in relation to the clown-world narrative about inflation. A couple of short years ago i recall Jerome Powell come out saying we need to generate higher than normal inflation. That they planned to generate significantly above the 2% norm, and would let it run hot for longer than normal. A string of articles followed making this point, and the incredible claim that persistent low inflation was the real danger.

Fast forward to the present, and add in a 40%+ expansion of the monetary supply we see official inflation numbers in the US have been in the high single digits. No one actually buys the cooked up official numbers however, as they have continued to move the goal posts in what they include in their calculations. Even the New York post has caught on - publishing an article a couple of days ago discussing the changes to how inflation is calculated. This topic has been completely taboo for years, but it’s now becoming understood by the mainstream.

Former RBA big swinger, Ian Macfarlane has now come out of the inflation closet and said that inflation is unlikely to get back to the long-standing target of 2-3% in Australia or the US, and is likely to be much higher.

“I find it hard to think that it will just come back to 2 per cent. I think there’s enough scarcity out there, particularly with such a tight labour market both in the US and here, and with the feeding through of all the supply shocks... I think 3-4-5 per cent is more likely. It could go up to 7 or 8 per cent,”

The latest clown world numbers in Australia were 5.1% with the US hitting 8.3%. I’ve included a list of inflation data shared by Charlie Bilello below that shows the current state of play in many major nations. More than half of these are above 6%. Countries like the UK, Spain and the Netherlands are between 8 and 10% and 6 countries well into double digits. Remember, these are official numbers, the reality is much much worse.

Something that is completely missed when discussing inflation, is the fact that inflation never reverses - It compounds. At a 5% rate of inflation your money loses over 40% of its value in 10 years. It is essentially outlawing the ability for people to save. It’s an unofficial ban on saving. With the unit of account eroding at 40% every 10 years the level of misinformation in our monetary system becomes extreme. It increases our time preference and we will continue to devalue the future at an ever increasing rate.

This is a recipe for disaster, and it’s why we bitcoin. If you’re still storing your wealth in political shitcoins, it may be time to reconsider.. If you leverage bitcoin as a savings device, you get the opposite effect. Everything is going down in price over time. Everything is getting cheaper vs sats. Or said differently, any [fill in the blank] political money is buying less and less sats.

3 years ago you could buy 13,000 sats per USD. 2yrs ago just over 10,000 and currently around 3,300.

The simple truth here is that the system of money has no place being controlled by any single entity. It’s simply too powerful. As Spiderman’s uncle said “with great power comes great responsibility” and as the separation of the monetary system from the state continues, it requires you to take back your power. As you can see from the above, the sooner you do so, the better.

Hope you all have a great day. I’ll talk to you tomorrow.

AK

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