Geopolitical Video: The truth about Inflation – in 9 minutes
The truth about inflation in 9 minutes – A truly independent view.
All over the world prices are jumping and governments and financial experts are blaming China, Russia, miners, meat packers, even the wind for higher prices. The truth is G7 governments’ Monetary Policy has created this. We should be cautious when they say this is only temporary and not our fault. Sadly, markets are co-responsible.
Some truth: Prices are rising because most companies’ production facilities have not been renewed or properly maintained for 11 years! Companies were busy borrowing cheap money to buy back their own stock, to take over their competitors and to speculate in popular but unprofitable unicorns. That is how many companies made money: utterly unproductive and uneconomic.
What did policy makers of the major Western industrialised nations do over the past 11 years?
a) they printed huge amounts of paper money out of thin air to pay for their deficits and to buy stocks, bonds and real estate (they created an artificial market rally). They said “we can print more since there is no inflation”, and sadly sadly markets applauded instead of demanding 7% or more for 10 year G7 Treasury Bills.
b) they put interest rates at zero or below zero – They destroyed the economic incentive for companies to invest in R&D, productive capacity renewal, maintenance, labor force training etc.
When we look at the big picture we see that governments created an unprecedented “wave of under-investment”. That is coming back on the world with a vengeance.
Because of the government’s monopoly on inflation data and the collusion between central banks & markets (both on the same boat since 2009) to avert external audits on CPI data and broad misinformation on the issue, I define deflation as the general decline in balance sheets and/or productive capacities as result of monetary policy.
The G7 monetary policy has been for 11 years systematically dis-incentivising the renewal and maintenance of productive capacities. At the first disruption, plants around the world can’t produce. One shortage leads to the next and finally to price increases. The price increases of meat, energy, poultry, rice etc. is not so much because of Covid, but because too many companies in too many sectors aren’t able to run at full capacity – nowhere near that. Extensive zero rate policies create inflation, but over time they destroy productive capacities and shrink “productive” balance sheets, potentially shrinking GDP.
Independent Global Geopolitical and Macroeconomic Research by Christian Takushi, Switzerland
Disclaimer: None of our comments should be interpreted or construed as an investment recommendation
Note: If you are not a qualified investor, you should consult a professional investment adviser before making any investment decisions
A distinct broad approach to geopolitical research
(a) All nations & groups advance their geostrategic interests with all the means at their disposal
(b) A balance between Western linear-logical and Oriental circular-historical-religious thinking is crucial given the rise of Oriental powers
(c) As a geopolitical analyst with an economic mindset Takushi does research with little regard for political ideology and conspiracy theories
(d) Independent time series data aggregation & propriety risk models
(e) Takushi only releases a report when his analysis deviates from Consensus