Consumption falls because we’ve tightened monetary conditions: Will Universal Basic Income LOWER the cost of doing business? Disincentivizing labour during DEFLATION – June 25, 2022,
Bitcoin think tanks are finally seeing things my way and they’re trying to skirt around it. Whether you’re talking about a debt jubilee, a universal basic income or making the Federal Reserve money printer go burrr, the reality of the situation is that the COST of doing business is up, and the FEDERAL governments of the developed world have lost control of CONSUMER price inflation.
I’ve been arguing with the Gold Standard crowd for a while saying that NOBODY wants a government gold standard, I’ve also stated that the Petro-Dollar makes the most sense, because whether you’re talking about diesel and gas for cars are PLASTIC and polyester everywhere, oil is and a CONSUMPTION led economy is where we are right now.
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Gold is something to be STORED, oil is something that is CONSUMED. Now, I’m all for a transition out of oil, but as I’ve stated for a long period of time, humanity needs a VARIETY of energy options. The Bitcoin crowds want Bitcoin to be at the very least the number reserved digital asset, and I have to question, why? Because technology historically EVOLVES, making technology DEFLATIONARY.
How do you justify making Bitcoin inflationary? You do that by debasing the U.S dollar, which is all well and good, but as I point out, how do you value a Bitcoin without the U.S dollar? I argue you CAN’T. Fiat currencies are petrodollars and presently Progressive politicians ALL OVER the world have declared war on oil and other fossil fuels.
This is DEFLATION, but… let’s stop pretending there aren’t price controls all over the economy. When most people talk about the “Nixon Shock” they ignore the part where Nixon talks about PRICE CONTROLS. Well, let’s go further back than consumer price controls and talk about wage-price controls and things like rental controls. These FIXED costs already exist and are already causing SHORTAGES of things.
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Because government sets the wage BOTTOM, you still have a lot of private businesses that can’t find talent, why? Because most SKILLED laborers know what goes into performing at the job, and often the private sector can’t pay them what they imagine their talents are worth. Now, why is that exactly? It’s because minimum wages are ARTIFICIALLY high.
What some call a livable wage revolves around tax collection for the government to finance its spending, if you’re unaware, income taxes are usually the largest tax to come out of someone’s paycheck and even if they get more money back at the end of the year than they paid in income taxes, that’s money they can’t spend into the economy until tax time, meaning that may have to borrow money to spend it and there’s a cost to borrowing, especially as a consumer.
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Asset price inflation takes longer to destroy the economy, but CONSUMER price inflation is in your face and unavoidable. As an example, I can avoid inflation on rent if I stay put in my rental-controlled apartment, but I can’t avoid inflation if I buy a house or move somewhere else. I personally expect gas prices to CRASH, I can’t say when but I expect them to crash, but for ALL THE WRONG reasons.
When oil prices crash, oil companies are going to be even more disincentivized not to drill, why? Because costs have gone, and if costs of gone up and the oil markets crash? it also means profit margins will be going down! Now, for some, they’re imagining Universal Basic Income or some other stimulus to fix this, but I’ll say it again, the fix to what we’re experiencing now is AUSTERITY MEASURES, the government is TOO BIG!
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If costs come down, where is Bitcoin in all of this? I don’t know, but Austerity means getting money out of the WRONG hands. If you CAN NOT contribute to the economy, you don’t deserve a LOAN! It’s really that simple and if you imagine I’m only talking about people on Welfare, NO, I’m also talking about a lot of businesses that would otherwise be BANKRUPT if their businesses weren’t being propped up by artificially low central bank interest rates.
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There are a lot of BAD IDEAS in the marketplace right now and one way or another they’re going to go bust!
Interesting times ahead!