our friend @Alkiphron has censured me for calling what we have been experiencing over the past few years of Covid “hyperinflation” … he pointed out it doesn’t meet the criteria of “hyperinflation” and is instead merely high inflation …
OK i don’t care. I lived through hyperinflation ( by any definition ) in Ukraine in the 90s and while what we experienced lately in US may be different in some ways really it is the same thing. I don’t care how somebody defines “hyperinflation” i am fucking calling what we got hyperinflation.
To me hyperinflation is when inflation goes from beneficial to oppressive. When you feel suffocated by it. When the money loses value faster than you can spend it. THAT IS WHAT WE INDEED HAVE.
Normal beneficial inflation is when you know you can’t stuff money into mattress and have to invest it into stocks or real estate or you will have nothing to retire on - it’s beneficial because it stimulates economy through investment. That is to say Normal inflation will destroy your savings, but it won’t affect your grocery bill depending on whether you go shopping the day you get your paycheck or a week later.
I buy whey protein on Amazon about once a month - and every month i have been watching the price creep up. At this point i had to ask myself - if i have the cash to buy it now, should i buy it now even though i won’t need it for another few weeks because i know for a fact it will cost more then ? when you start thinking like this - that’s hyperinflation TO ME.
this is no longer beneficial. it is now pathological. THAT is the “hyper” part TO ME.
under normal inflation you never buy things before you need them just because you expect them to go up in price. when you do - it means you are living under hyperinflation, regardless of what the technical definition of hyperinflation is.
i don’t need the technical definition and will not bother looking it up because i lived under hyperinflation in Ukraine and know what it FEELS like and that is what we in fact have.
it’s the feeling of anxiety that makes you want to get rid of money the second you get it even if it means buying things you don’t need, or buying more than you need or sooner than you need.
WE HAVE THAT NOW
it doesn’t benefit anybody and hurts everybody when people begin to stockpile goods anticipating that their price will go up. in a well functioning system you buy things JUST IN TIME to use them, not whenever you get a pay check because you have to get rid of cash.
recall that this kind of stockpiling behavior started IMMEDIATELY when Covid hit. it happened BEFORE any price inflation. stores ran out of things like toilet paper and soap almost instantly BEFORE any price increases.
SHORTAGES CAME FIRST - PRICE INCREASES FOLLOWED AFTER A LONG DELAY.
let’s look at a simple example - i have an apple and you have a dollar - i have nothing else to sell and you have nothing else to buy - thus the price of apple is a dollar. if you had two dollars the price would be two dollars and if i had two apples the price would be 50 cents.
price is just the amount of money people have to spend divided by the amount of goods available to purchase. prices go up for one of two reasons - people have more money - or there are fewer goods.
yes printing more money increases prices but it doesn’t make things less affordable. things only become less affordable when the amount of goods decreases, which is what we have.
you can’t collapse an economy by printing money even if it leads to hyperinflation, because money is simply an accounting system and what really matters is products - food, energy etc.
printing money at worst shakes out idiots who aren’t good with math ( such as pensioners who end up homeless ) but it does nothing to sophisticated businesses with good accountants.
in economies that failed during hyperinflation it was not the cause of the collapse, but a consequence of it. it’s the classic case of correlation doesn’t imply causation.
let’s look at two examples: stagflation in Japan and Hyperinflation in Ukraine in the 90s ( when i lived there ).
stagflation is when you print money but it doesn’t result in economic growth, which is considered a death spiral and it is one Japan has been in for a while now.
what caused it ?
two reasons primarily:
1 - demographic collapse / aging population.
2 - increasing competition from Korea and China.
Japanese economy was a tech economy and technologic innovation requires young people. But Japaenese young have become disillusioned and retreated to porn, video games and anime. they stopped working or having kids. Japan is turning into a giant senior care facility. A nation like that can’t deliver the innovation required to compete in tech.
30 years ago when i came to America Japanese cars and “Import” cars were synonymous. There were many Japanese brands like Mitsubishi thriving. Today there is really just Toyota, Lexus, Honda and Subaru. And Lexus is just a brand of Toyota and Subaru is very closely aligned with Toyota as well so really it’s just Toyota and Honda left and Honda is starting to struggle as well so we’re really looking at just Toyota going forward.
What has replaced them ? Kia / Hyundai / Genesis from Korea and now we’re starting to see Chinese brands like Volvo, Polestar etc…
30 years ago there were many thriving Japanese electronics companies like Panasonic, Sharp etc. Today only Sony is left.
What has replaced them ? Samsung from Korea and Chinese brands like Huawei ( number 1 phone brand in the world ).
Japan has been collapsing demographically and as a result losing to Korea and China in tech … their downfall wasn’t caused by stagflation, rather stagflation was caused by their downfall …
Hyperinflation in Ukraine in the 90s followed the collapse of the Soviet Union.
Many bad things followed the collapse such as privatization ( that’s where state assets were stolen by Oligarchs ), all sorts of corruption and crime and so on.
Hyperinflation was one of the many negative consequences of the collapse. It didn’t cause the collapse - it FOLLOWED the collapse.
The collapse itself was an inevitable consequence of communist USSR economy not being able to compete with America in the arms race and the cold war.
Japanese failure was due to demographics the Soviet failure was due to Communism, which resulted in USSR breaking up, Ukraine becoming independent and going through Hyperinflation.
Again, inflation here is a downstream effect of poor productivity.
Wait dissident, are you saying that printing money doesn’t cause inflation ?
it does, but in a fundamentally healthy economy printing money primarily causes INVESTMENT and EXPANSION of economy, rather than inflation.
in a fundamentally healthy economy printing money creates a LOT of growth and A LITTLE bit of inflation, which is actually BENEFICIAL because it encourages even more investment from people with money stuffed under the mattress.
however there are limits to growth. you should only print money when it can be used to start new businesses or expand existing ones. that is not always the case.
for example let’s say you’re Japan and you print money - will you magically get a lot of tech startups when your country has no young people ? no you will just get stagflation.
or let’s say you’re America under Covid Lockdowns and you print money - will you magically get a lot of business activity when people are not allowed to leave their homes and are getting mass fired for refusing vaccinations ? no you will just get high inflation.
What happened during Covid lockdowns is first there was panic and idiots started shorting the stock market believing it would collapse …
Stock Market collapse was not something the FED had on their mind because everybody is leveraged today and if stocks started crashing it could lead to a cascade effect of bank failures and so on - so the FED stepped in to prevent this scenario by printing money to pump up the stock market …
But this money had nowhere to go. It was printed not for purposes of funding new businesses or expanding existing businesses but simply to prevent stock market collapse by pumping the market with so much liquidity that people had nowhere to put money except into stocks even ones with no future like Airline stocks …
No new jobs were created by this printing, in fact with stimmies and such people were in effect paid NOT to work. What you got was a situation where the REAL economy ( jobs ) was suppressed with lockdowns, while the financial economy ( stocks ) was propped up with money printing …
it worked to the extent that we avoided bank runs and civil war but in the end there would be a price to pay - and that price was high inflation …
going back to our example of selling apples eventually the excess liquidity and shortage of goods had to be reconciled with each other and the result was prices doubling over the course of 2 or 3 years …
when you have simultaneously more money and less things to buy with it prices will increase …
recall no new businesses were started to soak up the money and also the amount of goods DECREASED because people were not able to work to produce them but simultaneously money was injected into economy … all of this combined led to high inflation
what happened wasn’t the fault of the FED or the dollar or FIAT and bitcoin doesn’t solve any of this
it all happened because government prevented people from being able to work
YOU CAN’T HAVE A FUNCTIONING ECONOMY WHEN PEOPLE ARE NOT ALLOWED TO WORK !
does it seriously take 140 IQ like mine to understand this ?
i know you have been told for decades that everything is the fault of the Jewish FED and that “bitcoin solves this” and blah blah blah but please just imagine that you have a brain and can actually think and not simply repeat what you were told 100 times …
in fact when something is true it doesn’t need constant repetition.
furthermore when something DOES need constant repetition it usually means it’s a lie.
even further Noam Chomsky correctly explained that people keep repeating things even when they don’t believe them simply because they know you will not get push back for saying something that everybody says - you will on other hand get push back for saying anything original.
so the right has created this zombie cult around Peter Schiff and Ron Paul that basically advocated investing into Gold … and later in the software engineering community this cult has shifted from Gold to Bitcoin but otherwise is the same cult …
same as how Keto became Carnivore but is the same thing …
these people are unwilling and unable to face reality - all they want to do is keep bleating " meat heals " and " bitcoin solves this "
they don’t have the intelligence to understand how the body works or how the economy works - they just want simple magical solutions where you make zero effort and everything is handed to you on a silver platter …
no in fact eating lots of animal fat doesn’t solve anything and neither does buying bitcoin …
or rather, buying bitcoin will make you rich ONLY IF there are other idiots still buying it by the time you go to sell …
but from that perspective you can make much more money investing in shitcoins and penny stocks
ultimately it doesn’t matter what you invest in - the key as explained by Buffett and Munger is not to get emotional.
that is to say it’s OK to trade meme assets like Bitcoin if you understand that they are meme assets - but if you are stupid enough to believe any of the things Bitcoiners say you are in danger.
frankly if you’re that fucking stupid you’re in danger period. you could shoot yourself in the face by accident for example.
please if you have any living brain cells in your skull try to understand what i wrote here.
i don’t know what else to tell you.
if you still can’t understand you may be beyond help.