The source essay is an interview wherein Russell Napier argues that central banks (eg our Fed) are no longer the primary manipulator of our money … however, our government is still the primary thief of our wealth:
“My structural argument is that the power to control the creation of money has moved from central banks to governments. By issuing state guarantees on bank credit during the Covid crisis, governments have effectively taken over the levers to control the creation of money. Of course, the pushback to my prediction was that this was only a temporary emergency measure to combat the effects of the pandemic. But now we have another emergency, with the war in Ukraine and the energy crisis that comes with it.
“You mean there is always going to be another emergency?
“Exactly, which means governments won’t retreat from these policies. Just to give you some statistics on bank loans to corporates within the European Union since February 2020: Out of all the new loans in Germany, 40% are guaranteed by the government. In France, it’s 70% of all new loans, and in Italy it’s over 100%, because they migrate old maturing credit to new, government-guaranteed schemes. Just recently, Germany has come up with a huge new guarantee scheme to cover the effects of the energy crisis. This is the new normal. For the government, credit guarantees are like the magic money tree: the closest thing to free money. They don’t have to issue more government debt, they don’t need to raise taxes, they just issue credit guarantees to the commercial banks.
“And by controlling the growth of credit, governments gain an easy way to control and steer the economy?
“It’s easy for them in the way that credit guarantees are only a contingent liability on the balance sheet of the state. By telling banks how and where to grant guaranteed loans, governments can direct investment where they want it to, be it energy, projects aimed at reducing inequality, or general investments to combat climate change. By guiding the growth of credit and therefore the growth of money, they can control the nominal growth of the economy.
“And given that nominal growth consists of real growth plus inflation, the easiest way to do this is through higher inflation?
“Yes. Engineering a higher nominal GDP growth through a higher structural level of inflation is a proven way to get rid of high levels of debt. That’s exactly how many countries, including the US and the UK, got rid of their debt after World War II. Of course nobody will ever say this officially, and most politicians are probably not even aware of this, but pushing nominal growth through a higher dose of inflation is the desired outcome here. Don’t forget that in many Western economies, total debt to GDP is considerably higher today than it was even after World War II.
“What level of inflation would do the trick?
“I think we’ll see consumer price inflation settling into a range between 4 and 6%. Without the energy shock, we would probably be there now. Why 4 to 6%? Because it has to be a level that the government can get away with. Financial repression means stealing money from savers and old people slowly. The slow part is important in order for the pain not to become too apparent. We’re already seeing respected economists and central bankers arguing that inflation should indeed be allowed at a higher level than the 2% target they set in the past. Our frame of reference is already shifting up.”
Full essay is “We Will See the Return of Capital Investment on a Massive Scale“
Only honest money can save or revive our failed Republic. Specifically, money that cannot be printed at will or manipulated electronically and yes that would be gold or silver as per the Constitution. Anything less would land us right back in the mess we are in.
That’s not going to work. If they want inflation to be 2 to 4 percent, they’re going to have to find a way to pull trillions of dollars out of circulation and burn it, every year.
The US began inflating the dollar with the creation of the federal reserve. To avoid local inflation, the dollars were exported to foreign countries who needed them to buy oil do to the “petrodollar” agreements with oil producers. When this strategy became obvious, to the US public, the possession of gold was outlawed so we could pretend we were still on the gold standard. When it became obvious to foreign countries, Nixon dropped gold convertibility entirely, ending the gold standard officially.
But still we continued printing money and sending it abroad in exchange for foreign goods…. for many decades. That’s a lot of dollars abroad… if not for the petrodollar, and the world view that the dollar was stable (reserve currency), it would have flowed back to the mainland and caused inflation, but it didn’t…. UNTIL NOW.
Oil producers are selling oil for *other* than the dollar. The dollar is clearly inflating at home, and the rest of the world no longer sees it as a stable store of wealth. All those decades of mass printed dollars are now flowing back to the mainland at the same time as we are printing massively more than in past for “QE”, bailing out foreign banks, and wars.
Massive inflation (hyperinflation) is a done deal. There is no available means to slow it down, much less stop it. The dollar is done. The only question is who will fall for the *next* FedCoin con, and who will find another medium of exchange.