Re: Inflation is always and everywhere a monetary phenomenon
Posted: November 1st, 2022, 12:15 am
HGV hours were reduced because of claimed safety issues:
https://vimcar.co.uk/resources/blog/hgv ... implified/
The UK soon found that these regulations were too tight and changed them:
https://vimcar.co.uk/resources/blog/hgv ... fied/#2021
But by then the damage had been done and the whole supply chain based on “just in time” was shown to be unworkable and this led to more shortages and with the shortages came price rises that people paid to guarantee supply and so the troubles of Covid that could have been addressed had HGV hours in Europe and elsewhere not been changed were not addressed and we entered the current inflationary cycle as HGV drivers saw their take home pay cut and so they quit the industry.
There is one School of thought that this is all random and is not part of a well thought out plan. That is not my experience of how governments work, but it is impossible for some to accept this as they believe governments work for the benefits of their citizens.
The effect of inflation is to reduce the huge debts that most western governments have built up. This has been a policy objective for many years and Covid provided the start of the inflation cycle and politicians then compounded the problems with the HGV regulations.
Then on top of all of this Russia invaded Ukraine after years of attempts by the Pentagon to extend Nato and this included the installation by Nato of the puppet regime of Zelenski. A leader of a country whose previous occupation was as a comedy actor.
Once this happened one had energy inflation and a massive scramble by Germany and several other countries to build as much storage as possible and then out bid other consumers for what ever natural gas was available. This all pushed up inflation and the spot prices of natural gas shot up until the point when all the available storage was filled and then the price tanked as there is a lot of natural gas outside of Russia.
Biden authorised lend lease to supply Ukraine with US weapons that, as was known from various middle East wars, are better than Russian ones, so that a small better equipped Ukrainian army was able to batter the Russians and force them back to the Crimea adding an hot war to the building tensions of cold war 2. Ukraine have no option but to keep buying on tick US weapons and this is adding defence inflation and the US makers of the weapons are making a fortune as Ukraine sinks deeper into debt.
Where all of this ends, who knows. One hopes that at some point there are peace talks, but Russia has a lot of well educated scientists who in the by and by are likely to develop weapons that are as good or better than what the US is lend leasing Ukraine adding to another arms race. The Russians were hugely out gunned by the German forces in the second war, but they soon developed better weapons and tactics and then moved west rolling through the Germans and leading to the warsaw pact era that lasted until Gorbachov in what was called Cold War 1.
It would be nice to see a States-person emerge who can calm the Russian/Ukriane situation down and prevent the other potentially explosive clash between China and Taiwan, but as of now I do not see one and we are two years from the next presidential elections in the US and who knows when leadership in Moscow and Beijing will change.
The world has gone from a low inflation relatively peaceful state to a high inflation and very dangerous state where the danger of nuclear war are enhanced and where the savings of many with fixed investments are being murdered and those able to profit from inflation are making a fortune, exactly has happened in previous inflationary spirals. The deflationary forces on innovation are struggling to compete with this Tsunami of inflation as happened in the 1930’s and a lot of wealthy folk are arguing that this is a needed and long over due correction that will re-establish the power of the central banks and governments. Already we are seeing central banks wanting to introduce their own cyber currencies and as central banks control the levers of the economy they are forcing through their agenda.
If things continue as previously we will see a flood of housing hit the market as buyers used to variable and low interest rates will try to escape from the new high rates.
At the same moment we are seeing the beginning of the AI revolution where more and more jobs are becoming machine doable. This is a new phenomenon, never seen before, but as it gains momentum many well paid jobs will vanish and this will enhance the power of States who can control what universal income levels are available and what personal wealth is acceptable. The well known and repeated mantra of:
You will own nothing and you will be happy.
Many will dispute that AI can have this effect and that the good times of the last two generations are over and hopefully I am wrong, but that is how I currently see things.
The primary defences against inflation are assets that increase in price during inflation periods and which have pricing pressure. Many have long argued that gold is such an asset, but so far they have been disappointed and cyber currencies have been creamed too. Growth equities and land generally do well during inflation, but an investor has to know what he/she is doing as growth industries have a shelf life. Once upon a time Railways were seen as a growth industry.
Regards,
https://vimcar.co.uk/resources/blog/hgv ... implified/
The UK soon found that these regulations were too tight and changed them:
https://vimcar.co.uk/resources/blog/hgv ... fied/#2021
But by then the damage had been done and the whole supply chain based on “just in time” was shown to be unworkable and this led to more shortages and with the shortages came price rises that people paid to guarantee supply and so the troubles of Covid that could have been addressed had HGV hours in Europe and elsewhere not been changed were not addressed and we entered the current inflationary cycle as HGV drivers saw their take home pay cut and so they quit the industry.
There is one School of thought that this is all random and is not part of a well thought out plan. That is not my experience of how governments work, but it is impossible for some to accept this as they believe governments work for the benefits of their citizens.
The effect of inflation is to reduce the huge debts that most western governments have built up. This has been a policy objective for many years and Covid provided the start of the inflation cycle and politicians then compounded the problems with the HGV regulations.
Then on top of all of this Russia invaded Ukraine after years of attempts by the Pentagon to extend Nato and this included the installation by Nato of the puppet regime of Zelenski. A leader of a country whose previous occupation was as a comedy actor.
Once this happened one had energy inflation and a massive scramble by Germany and several other countries to build as much storage as possible and then out bid other consumers for what ever natural gas was available. This all pushed up inflation and the spot prices of natural gas shot up until the point when all the available storage was filled and then the price tanked as there is a lot of natural gas outside of Russia.
Biden authorised lend lease to supply Ukraine with US weapons that, as was known from various middle East wars, are better than Russian ones, so that a small better equipped Ukrainian army was able to batter the Russians and force them back to the Crimea adding an hot war to the building tensions of cold war 2. Ukraine have no option but to keep buying on tick US weapons and this is adding defence inflation and the US makers of the weapons are making a fortune as Ukraine sinks deeper into debt.
Where all of this ends, who knows. One hopes that at some point there are peace talks, but Russia has a lot of well educated scientists who in the by and by are likely to develop weapons that are as good or better than what the US is lend leasing Ukraine adding to another arms race. The Russians were hugely out gunned by the German forces in the second war, but they soon developed better weapons and tactics and then moved west rolling through the Germans and leading to the warsaw pact era that lasted until Gorbachov in what was called Cold War 1.
It would be nice to see a States-person emerge who can calm the Russian/Ukriane situation down and prevent the other potentially explosive clash between China and Taiwan, but as of now I do not see one and we are two years from the next presidential elections in the US and who knows when leadership in Moscow and Beijing will change.
The world has gone from a low inflation relatively peaceful state to a high inflation and very dangerous state where the danger of nuclear war are enhanced and where the savings of many with fixed investments are being murdered and those able to profit from inflation are making a fortune, exactly has happened in previous inflationary spirals. The deflationary forces on innovation are struggling to compete with this Tsunami of inflation as happened in the 1930’s and a lot of wealthy folk are arguing that this is a needed and long over due correction that will re-establish the power of the central banks and governments. Already we are seeing central banks wanting to introduce their own cyber currencies and as central banks control the levers of the economy they are forcing through their agenda.
If things continue as previously we will see a flood of housing hit the market as buyers used to variable and low interest rates will try to escape from the new high rates.
At the same moment we are seeing the beginning of the AI revolution where more and more jobs are becoming machine doable. This is a new phenomenon, never seen before, but as it gains momentum many well paid jobs will vanish and this will enhance the power of States who can control what universal income levels are available and what personal wealth is acceptable. The well known and repeated mantra of:
You will own nothing and you will be happy.
Many will dispute that AI can have this effect and that the good times of the last two generations are over and hopefully I am wrong, but that is how I currently see things.
The primary defences against inflation are assets that increase in price during inflation periods and which have pricing pressure. Many have long argued that gold is such an asset, but so far they have been disappointed and cyber currencies have been creamed too. Growth equities and land generally do well during inflation, but an investor has to know what he/she is doing as growth industries have a shelf life. Once upon a time Railways were seen as a growth industry.
Regards,