Biden Calls on the Fed to Fix Inflation

Add intractably difficult with the irrational and dishonest, and you have the makings of a possible calamity. [Gilder's Daily Prophecy] January 21, 2022 [UNSUBSCRIBE]( | [ARCHIVES]( ***SPECIAL MESSAGE FOR GILDER READERS*** [Click here to learn more]( Big news: George just returned from a 2,000-mile round-trip after making a shocking discovery that could dramatically change your financial future. There’s not enough room to unpack the full details here. But let’s just say: [This may be the largest profit opportunity of 2022](. It’s come to our attention that you might be missing out on extra benefits exclusively for Gilder's Daily Prophecy subscribers. Check out our website where you can find archives, updates, and everything else included in your subscription. You can access it by [clicking here now](. Biden Calls on the Fed to Fix Inflation [Jeffrey Tucker]Dear Daily Prophecy Reader, Before we get to today’s issue... There is something urgent I’m asking you to take a look at. One of my colleagues just made a rather interesting discovery regarding the future of “The Cryptocosm.” Specifically, he’s pinpointed a handful of [tiny investment speculations]( that are poised to ride alongside an exponential growth curve over the coming years. (According to his research, he’s projecting a 9,900% industry boom by 2026). George Gilder even recorded a short video clip explaining everything. [[You can watch it here]( It’s not long. Maybe three minutes or so. I hope you take a moment and watch it at your earliest convenience. After you take a look, read on below… Oh joy, it seems like the President of the US has gotten the message. He is suddenly aware that inflation is wrecking not just the country (who cares?) but his own administration (now he pays attention!). This is because on the one-year anniversary of his inauguration, the press coverage of his first year was absolutely brutal. Not even the corporate media can cover up for this train wreck. I wish all this were good news but it is not. There were a number of things completely wrong in Biden’s statement, and so brazenly wrong that most viewers would smell a rat immediately. First he said that we are in a period of high economic growth. Oh sure. Second he said that the reason for inflation is the virus. That’s really believable, not! Third he said that the Fed Reserve — which he was at pains to mention — is full of ideological diversity and gender balance! — will fix the problem. Asking the Fed to fix inflation is like counting on the Wuhan virus lab to contain a pandemic. And believing that gender diversity somehow contributes to sound monetary policy is nothing short of ideological delusion. What we have going on here are two forms of political diversion: one to blame the pathogen for declining purchasing power and two to celebrate gender balance as the key to restoring monetary stability. Meanwhile, you have a White House that is utterly mystified that Biden’s approval rating has slipped very close to being only one third of the American public. Truly, you can convince a third of the American public to believe anything, including that the moon is made of roquefort. These poll numbers are absolutely egregious by any historical standard. That seems to have set in motion a level of true panic in D.C. Former CIA Advisor: “They are LYING about inflation!” One former CIA and Pentagon insider is revealing the TRUTH behind the inflation numbers in America. A story so shocking and so powerful that it could bring the Biden Administration to its knees. [Click here to see the story](. What Is This Inflation Thing? Economics is a subject like biology or climatology: it seems like a specialization of experts but then it gets politicized and calls on everyone to get up to speed. More than in my entire career, I’ve had friends write to ask me to explain how inflation happens, what causes it, and what to do about it. Consistent with all communication these days, it does no good to recommend some 19th-century treatise. Everything has to be boiled down to a handful of words. Q: What makes the Fed have power? A: The Fed can create money out of thin air. Q: Really, how? A: When they buy things — mostly debt from the government but they can buy anything — they write checks on their bank account which is unlimited because they enjoy the right to do this, whereas no one else enjoys that right. Q: That’s super weird. Have they been doing this? A: Yes, they have been doing this. That was the whole key to the pandemic response. Lockdown and print! The main money supply numbers are captured in M1, but an update of the way the aggregate is assembled makes that table unreliable. As a result, we don’t really have a perfectly accurate way of knowing precisely how much new money has been created. Q: That’s crazy so what do we do to find out? A: One way is to look at M2. It shows that money creation by the Fed and banks was going through the roof until after Biden’s nomination. Then it settled down a bit. At its peak, we saw a 26% annualized money-creation rate. Using simple math and assuming everything else stays the same, anyone could have predicted high inflation. Right now, it is running at 12.6% annualized. [chart] Q: How does the creation of new money lead to inflation? A: Productivity in the economy is a bit like the fruits that go into making a pitcher of juice. The more pitchers you make, the more fruit you need, but if you don’t have the fruit, you have to keep adding water. The intensity of the flavor diminishes with each new batch. Purchasing power is like the flavor in this metaphor. It declines the more you water it down. Inflation is a symptom of this problem. Q: But what about the supply chain breakages, chip shortages, weather issues, higher demand, labor shortages, and general chaos associated with the virus? Can those cause inflation? A: Yes, absolutely, and sorting out causal factors here is not always easy. But here’s the thing: given how much extra money is washing through the world economy today, there is a huge potential for all of the causal factors to get far worse before they get better. For example, people are holding on to cash for dear life right now. If that changes in the other direction, you will see a huge push for higher prices in every sector. Q: How can the Fed reverse course here? A: There is no direct way to reverse course. There is no sponge to sop up liquidity. but the Fed can raise the interest rates it charges banks for borrowing money and that change will presumably affect interest rates throughout the whole borrowing-and-lending sector. By reducing demand, this will reduce the amount of money the banking systems will create. But the effects have a long lag, which is why we have seen in history the coming together of high interest rates and high inflation at the same time. Q: Is this what the Biden administration is urging the Fed to do? A: It’s not clear and the Fed is presumably “independent.” Mostly it seems like the Biden administration is planning for the Fed to take the fall for disastrous economic times ahead. Now they can say, “hey we told the Fed to fix this but they kind of flopped. Not our fault!” What’s Really Wrong Never in my life have I observed the collapse of a once-confident regime in real time on this scale. It’s amazing to watch, and listen to the denials, the excuses, the fake solutions, the sheer game of pretend. The propaganda hasn’t been this brazen and this implausible in some 80 years of American politics or perhaps ever. It certainly will not work. Like you, I’m curious how they will attempt to soft land this inflationary mess. There is no easy way out, not even if honest and rational people were running the show. Add intractably difficult with the irrational and dishonest, and you have the makings of a possible calamity. Is it any wonder that people have given up on government and everything associated with it? This is why so many have turned to independent institutions for news, technology, therapeutics, and sound money. Regards, [Jeffrey Tucker] Jeffrey Tucker Urgent 2022 Prediction: The Dollar Is Dead! 40% of all dollars in existence have been printed since 2020. That’s why prices everywhere are soaring, and more and more people are starting to lose faith in our currency. But not all hope is lost… In fact, according to one expert, crypto is the perfect way to sidestep a crash in the dollar – and even come out ahead! [>> To see why, click here now](. 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