Consumer Price Inflation = ECONOMIC DEFLATION: Interest rates will keep rising. How high will the Federal Reserve raise rates? My answer: Ask Joe Biden and his war on fossil fuel administration – November 5, 2022,
I like to be honest with people because what most people don’t understand about CAPITALISM is that it’s inherently DEFLATIONARY, in a capitalist society the CAPITAL flows to the people the MARKET deems will be the most RESOURCEFUL with said capital. Now, by deflationary, this doesn’t mean that your STANDARD of living won’t improve in a capitalist society; by deflationary, I mean as SELLER, prices for goods and services in CAPITALISTS society actually come DOWN, and the PRODUCERS become more efficient at PRODUCING.
Food and agriculture is the perfect example of capitalism’s DEFLATIONARY nature; farmers learned the hard way how capitalism could work them again. Imagine I’m growing fruits, and I spend a lot o money to grow these fruits, only to find out the MARKET for fruits is overly saturated, thereby DRIVING DOWN the price of the fruits I’m selling, I may soon find that capitalism is working AGAINST my profit margins, and this might lead me to LOBBY the government for some sort of GOVERNMENT WELFARE.
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As a farmer, I could argue that without people like me, Americans will starve, so to prevent DEFLATION in my business, a SCUM politician might create a rule, regulation, or LAW that has money sent to me into perpetuity because of patriotic duties to my country. Now, in capitalism, there are SMART and creative people who know how to EXTRACT capital out of people via INNOVATION.
So, another farmer, instead of begging the government for a handout, might start to make FRUIT JUICES. To get more money out of consumers, this entrepreneur might add some water to the fruit juice to and charge the customer more money per fruit in the fruit juices than the farmer who is simply selling FRUITS. This innovative process is how some achieve PROFITABILITY, whereas others experience LOSSES.
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Innovation is the only GOOD inflation; any other inflation in a capitalist society is REDISTRIBUTION. These redistributions schemes can only exist when a CENTRAL power has COMPLETE control over the money supply. Now, even in my fruit juice example, the capitalist making the fruit juice isn’t safe from deflation because another capitalist can duplicate the process and drive down the price for the consumers.
Capitalism is indeed a RACE TO THE BOTTOM, and this is indeed the flaw of capitalism; I’m not advocating socialism or communism, but I want the reader to comprehend where the DEMAND for Big Government came from. The demand for more government intervention in the economy came mostly from the working classes, who wanted to be made whole for their losses.
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Ofcourse we know governments should have NEVER caved into these shortsighted Big-Government loving individuals, but they did, so now we’re stuck in this system in which AUSTERITY MEASURES are considered the last resort.
Austerity is a set of political-economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both.
When most people talk about government spending, they’re also referring to government regulations because in order for the government to ENFORCE regulations, they have to spend money to do it. But regulations on economic activity are the MAIN DRIVER of consumer price inflation. So when Joe Biden declares war on American energy produced from fossil fuels, it makes the cost to PRODUCE energy more expensive.
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Now, because money is nothing but a MEDIUM OF EXCHANGE, money can’t do any magic tricks. Actually, money can do magic tricks, but after people figure out that they’re being scammed, they’ll stop using the money/currencies, and HYPERINFLATION will ensue.
In economics, hyperinflation is a very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as they usually switch to more stable foreign currencies.
Americans are well versed on hyperinflation, and it’s why the Federal Reserve DOES NOT print money; this is also why in case you’re wondering, the Federal government has to BORROW money into existence. The market has to be able to do checks and balances on the money supply. If let’s say, the U.S Federal government could print money and there was no accounting of the money they gave to people, it would be IMPOSSIBLE to put a price on things.
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The concept behind a welfare state is that the welfare or free money being handed out is SUPPOSED to make citizens more productive, however, as you see in America, the homelessness problems are getting worse, and people ask, well, why doesn’t the government print money and hand it out to the homeless? Well, as you can see, WELFARE is malinvestment; America has done so much malinvesting that the federal government and the people who voted for this federal government actually believe that the government has the ability to flip a switch, phase out fossil fuels and replace fossil fuels with renewable energies without anyone feeling any economic pain?
As I pointed out in the farmer example, capitalism drives down prices, whereas Big Government INFLATES prices. In capitalism, in order to remain solvent, you’d be wise to be resourceful and innovative. With Big government socialism or communism, you’re extremely reliant on the people in charge of running society.
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Meaning that if the people in a democracy make the mistake of voting for stupid people, EVERYONE in that society suffers. Many like to blame the central banks for all the economic and financial problems; I differ in that I point the blame SQUARELY on democracy. Meaning that we are to blame for people like Joe Biden being put into office.
I could also blame the structure of the REPUBLIC; it’s not like having a REPUBLIC is the answer either; if the LAWS of the REPUBLIC are not properly constructed, that republic could also be doomed to fail. In capitalism, in order to achieve profitability, you have to THINK AHEAD or imagine a future; the same must be true when designing a Republic.
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a Republic is basically a law, and the law of the Republic must NOT allow idiots to decide the leader of a nation, or better yet, as many people point out, all republics should have SMALL Federal governments. People who love Liberty vs. people who love Big Government are not compatible. But how do you respect each other if you’re both living in the same nation?
The answer is obvious, but not a simple one, because as Republicans in the United States quickly learn, whenever the Democrats destroy their State, they migrate to Republican states and repeat the process. How does America solve that problem? I argue through EDUCATION. Robert Kiyosaki writes extensively about financial education, and I agree with him.
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When you can see and comprehend the NUMBERS, you’ll know when someone is LYING to you. I like to compare Politicians to salespeople, and in some certain SALES jobs, you have to know about the products and services you’re selling because if your customers know more than you do, you won’t make any sales. My thinking is if VOTERS know more than most politicians, only COMPETENT politicians will dare to run for political office.
I also believe a more educated society will end media propaganda because if the common citizen is smarter FINANCIALLY than the professional writer from a mainstream media outlet, said mainstream media outlet will have a difficult time converting readers into paying subscribers. Why I bring this up is because I don’t see how the Federal Reserve can lower interest rates without Joe Biden ending his DOMESTIC war on fossil fuels.
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Now sure, the Federal Reserve can go back to zero, but in an environment in which America is increasingly reliant on IMPORTING energy, lowering interest rates is ENCOURAGING more malinvestments from the Federal government. Meaning that with cheaper money, Joe Biden will feel inclined to BUY VOTES, meaning throwing money to the UNPRODUCTIVE, which will cause more ECONOMIC DEFLATION.
Interest rates will keep rising. How high will they go? | cnn.com
Interesting times ahead!