“Inflation, Like Greed, Is Good!”

The Eternal Appeal for Inflation Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] “Inflation, Like Greed, Is Good!” - “Inflation, Like Greed, Is Good!”… - The eternal (false) argument for inflation… - The proper money supply… Recommended Link [Attention! Before You Read Any Further…]( Before you read any further in today’s issue, an urgent situation needs your immediate attention. If you don’t plan on claiming this new upgrade to your Strategic Intelligence subscription, you’re missing out on a huge opportunity. Right now is your chance to grab one of the biggest (and most valuable) upgrades our company has ever made to a newsletter. I’m taking Strategic Intelligence to an entirely new level and I’d hate to see you left behind. [Click Here To Upgrade Your Subscription]( Annapolis, Maryland December 6, 2021 [Brian Maher]Dear Reader, “Inflation, Like Greed, Is Good!” This is the measured conclusion of a certain Peter Tchir… strategist with Academy Securities… taking his inspiration from Mr. Gordon Gekko. Tchir continues: At this moment in time, I do not see any way of achieving our goals without generating inflation… So long as inflation is accompanied by job and wage growth, who really cares about it? This publication’s editor — for one — cares about inflation. He is rather certain his wage growth will fail to match inflation’s gallop. Even if his wages do keep stride, how does it benefit him? What he gains in his wallet he loses at the filling station, at the grocer, at the eatery, at the drink house, in the form of elevated prices. (Mr. Tchir is aware of the dilemma. But he believes wages are expanding at a rate greater than inflation, putting the consumer in the lead. He is evidently unaware of our straitened circumstances). Yet here is his fear: Monetary authorities will attempt to strangle the inflation infant presently sheltering in its protective crib: I think that the stupidest thing we could do right now is cut off our growth trajectory because a few politicians… can’t understand that there will be some trade-offs, and are pandering to some audience who isn’t more than benefiting from the economic growth being generated as we make massive changes to our economy and how we compete globally… I think that we need the courage to ride this paradigm shift through and accept inflation as just a part of that goal! Be vigilant for signs of stagflation, but don’t kowtow to ill—informed soundbites. The Myth That Never Dies We believe Mr. Tchir subscribes to a behemoth fallacy. That is the fallacy that money and wealth are synonyms. Money is wealth — and wealth is money. It is the eternal appeal of inflation, the siren’s song never-ending, the snake’s oil forever on sale. Murdered and buried 1,000 times, 1,001 times this myth has stormed from its tomb. The very gods envy its immortality. Man chased these gods down from Olympus aeons ago. Yet the money myth lives, breathes, prospers in A.D. 2021. Explains Henry Hazlitt in his masterly Economics in One Lesson (1946): The most obvious and yet the oldest and most stubborn error on which the appeal of inflation rests is that of confusing “money” with “wealth”... So powerful is the verbal ambiguity that confuses money with wealth, that even those who at times recognize the confusion will slide back into it in the course of their reasoning... Yet the ardor for inflation never dies. It would almost seem as if no country is capable of profiting from the experience of another and no generation of learning from the sufferings of its forebears. Each generation and country follows the same mirage. Each grasps for the same Dead Sea fruit that turns to dust and ashes in its mouth. For it is the nature of inflation to give birth to a thousand illusions. Recommended Link [These weird devices are about to appear all over America]( [Read more here...]( According to America’s top tech futurist – dubbed the “Tech Prophet” by Forbes – millions of these strange little devices are about to appear in every corner of our country… including your home. What are they? And why did one tech insider with connections to Apple and Microsoft claim they’ll “rewrite the rules of what’s possible?” [Click Here To Learn More]( The Argument for Inflation The illusioned will tell you that gentle inflation is benign — even healthy. That is because consumers will purchase goods today knowing their dollar will fetch them less tomorrow. Thus the flaming dollar, burning its hole in the consumer’s pocket, is a severe liability. He tries to pass it off to the next fellow before it burns away entirely. It spurs him to spend… which adds a figure to the gross domestic product. A bearable inflation can therefore keep an economy on the jump and business in funds. Deflation — contrarily — means consumers will delay today’s purchases because they expect lower prices tomorrow. Tomorrow’s dollar will pack greater wallop than today’s dollar. What is the ultimate result, the evil result? Goods will wallow upon shelves, stockrooms will overflow…and the wheels of commerce will slow to stalling speed. Under extreme deflation, they may screech to a violent stop. Thus is deflation the ultimate bugaboo, the ultimate fee-fi-fo-fum, the ultimate devil of monetary economics. Hence the monomaniacal zeal for inflation. Where Is Deflationary Armageddon? But is it true? Is deflation really the supreme monetary evil? As we have argued before: Consider the example of computers. Consider the example of large-screen televisions. Their prices slide lower year after year. Yet computers and large-screen televisions do a very brisk trade — despite consumer expectations of falling prices to come. If deflation were so vicious…why do consumers continue purchasing this gadgetry this year… rather than wait for next year’s lower prices? Where is Deflationary Armageddon? It is nowhere to be found. Yet let us assume the Federal Reserve attains its heaven of “price stability.” Are prices truly stable? Inflation Parading as “Price Stability” Under the free and unharassed market, prices generally decline across time under capitalism’s ruthless and pitiless efficiencies. The $10 widget becomes the $8 widget becomes the $5 widget. Now let us assume the monetary authorities have been busy. They have been inflating the currency. What is the result? The natural deflationary processes are knocked out. The $10 widget — dropping to $8, then $5 on the unhindered market — stays $10. Our hypothetical scenario presents the very picture of price stability. Yesteryear’s $10 widget is next year’s $10 widget and the year's after that. Yet consider the larceny consumers have endured, invisibly. Too Slow to Notice They could have had the very same widget for $5 in a few short years. But they must pay $10 due to inflation. The $5 they could have spent on other goods they must spend on the widget. Yet they may celebrate their invisible thievery because the widget costs $10 one year to the next. They mistake inflation for price stability. They are inflation’s unknowing victims. They simply fail to detect the slow-motion heist… inching along imperceptibly… as a glacier inches along imperceptibly. It is nonetheless real. We hazard the monetary authorities delight in the invisible fleecing. “Look at the Consumer Price Index,” they shout. “We haven’t even been able to generate a sustained 2% inflation. How can anyone suggest there’s serious inflation?” We would refer our friends within the Federal Reserve to the above example. Recommended Link [Here is your instant access link]( [Read more here...]( Here is your instant access link to The Next Gen Crypto Summit. Keep in mind this is a first-come, first-served event. Anticipation is high, and with the special link above, you’ve got ‘first read’ access. By the end of the day, hundreds of thousands of folks will have had the opportunity to get the research on the 9 Next Gen Cryptos I believe will change the world. It’s been years since I’ve done something like this… And I’d love for you to be there. [Click Here To Access The Summit]( A World of Fixed Money Now consider an economy with a fixed supply of money. In this near-Utopia, the Federal Reserve has been placed in handcuffs, the United States government thrown from the credit markets. All goods and services must therefore bid against the existing money stock. What would be the effect? Some prices would rise through the hurly-burly of supply and demand. Others would fall through the same hurly-burly of supply and demand. If certain prices increase, does this equal inflation? If certain prices decrease, does this equal deflation? No and no — if certain prices rise, others will fall. If certain prices fall, others will rise. The scales will come into balance… at least to a fair approximation. What then is the proper money supply? As we have maintained before, none exists. Any amount of money — practically speaking — will do the duty of any other amount. If prices are free to seek their own equilibrium, under their own steam, changes to the money stock are unneeded. Any Amount of Money Will Do Explains the grandee of Austrian economics, Ludwig von Mises: As the operation of the market tends to determine the final state of money’s purchasing power at a height at which the supply of and the demand for money coincide, there can never be an excess or deficiency of money. Each individual and all individuals together always enjoy fully the advantages which they can derive from… the use of money, no matter whether the total quantity of money is great or small… The services which money renders can be neither improved nor repaired by changing the supply of money… The quantity of money available in the whole economy is always sufficient to secure for everybody all that money does and can do. Affirms the late Austrian economist Murray Rothbard: We come to the startling truth that it doesn’t matter what the supply of money is. Any supply will do as well as any other supply. The free market will simply adjust by changing the purchasing power, or effectiveness of [money]. There is no need to tamper with the market in order to alter the money supply that it determines. And so we speak our piece against inflation, both seen and unseen. Thus we declare ourself heretic. Today we raise our infidel flag… and train our cannons on the castle walls of the economics profession. In conclusion, we petition the government to shutter the Federal Reserve… and point its members toward productive employment in private industry… if they can find any. Their services are not required… Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning Editor’s note: How can you protect your wealth against the ravages of inflation? Some are turning to cryptocurrencies. But history points to something far more enduring... When Rome was overrun by barbarians and the empire collapsed… [powerful families survived by storing their wealth in gold.]( [Click here for more...]( Gold is private and secure and remains incredibly valuable today. It is also dirt, dirt cheap… for now. And the best time to buy insurance against chaos is when the risks appear fewest. But when the bug hits the windshield, gold will likely explode in value, and quickly become out of reach for most investors. Centuries ago, smart families maintained their lifestyle while the rest of Europe plunged into centuries of chaos by owning gold. [Click here to see how gold can potentially save you from chaos today.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Brian Maher][Brian Maher]( is the Daily Reckoning's Managing Editor. Before signing on to Agora Financial, he was an independent researcher and writer who covered economics, politics and international affairs. His work has appeared in the Asia Times and other news outlets around the world. He holds a Master's degree in Defense & Strategic Studies. 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