Camouflaged inflation: how depressed market demand is masking the cusp of hyperinflation
Arguably the most basic principle of economics is that of supply and demand: prices rise when the demand for something outstrips its supply, and prices fall when the supply exceeds market demand. I saw evidence of this at the peak of the building boom when OSB prices more than tripled, prompting me to delay construction of some of my fancy sheds. Now that home construction is so slow that many builders and contractors are filing for bankruptcy and home prices are falling as inventory of homes and their components pile up, I expected that lumber prices would plummet in response. That's not what I found recently while visiting a local big-box lumber warehouse. Instead, OSB and other lumber prices were higher than they were a few years ago, before the 2008 economic collapse.
In purchasing plastic to make the prototype of my robotic chef, I noticed a staggering price increase that was not attributable to heightened demand or reduced supply.
So what's going on? Why are prices rising when they should be falling?
The explanation is simple: The expected fall of prices is camouflaged by inflation that erodes the value of a dollar.
Now for the scary part: If home builders were as busy as they were at the peak of the building boom or even in normal times, lumber prices would have skyrocketed. Official government figures for yearly inflation—the Consumer Price Index—are misleading because the feds conveniently omit some essential goods whose prices are spiking.
Why prices are rising when they should be falling is no mystery. The Federal Reserve System is literally creating money out of thin air in a desperate last-ditch attempt to buoy our economy and erode the value of a dollar to give the U.S. government a better chance of repaying its massive debt. That sounds good until you realize that diluting the value of a dollar angers our creditors, making them less likely to lend us money in the future, and more likely to demand higher interest rates if they give us the money we need to survive, now that 40% of our national budget is borrowed. It's called living beyond our means. Way beyond.
There's an even greater reason to loathe inflation: It erodes the value of your money, retirement accounts, and possessions. The federal government knows that people would revolt if it robbed your savings and retirement accounts every year to pay its bills, so they indirectly steal money from you and others by diminishing the value of what you have, effectively transferring it from you to them and the well-connected fat cats who pay off politicians to do their bidding. To gain a greater insight into how this audacious scam is robbing Main Street to enrich Wall Street, read my book, From Bailout to Bliss, which is free for personal use.
The federal government and fat cats like George Soros think that you are economic dunces, and they hope you remain that way so they can keep you in the dark while they pick your pockets.
When most people realize what the leeches are up to, it will be too late for them; the über-rich will be even richer, owing a much larger share of the world's economic resources. When they have a bigger piece of the pie, guess who is left with less? You, me, and even most of the suckers who voted for change.
Contrary to popular belief, Barack Obama is less of a socialist or Marxist than he is a crony capitalist, which is even worse. Instead of spreading the wealth around evenly, Obama uses the power of the federal government to take money from us and give it to his special interests as a quid pro quo for their support. In a nutshell, that's crony capitalism at work. Dirty work.
When the government picks winners and losers, the losers are the ones like you and me who don't pay politicians to do what we want done.
As an ER doctor, I've met many criminals but respected them more than I do Obama. Unlike Barack, who masquerades under the pretense of being a principled person, the common thieves didn't bother to put on a false front of being morally upstanding.
Here's a pop quiz to test how smart you are:
Q: Who is more detestable? A crook who steals $20 from you, or a President who prints Monopoly money to reward the UAW and other special interests while eroding the value of your savings and retirement accounts?
Hint: $20 is literally pocket change compared with the thousands of dollars Obama is draining yearly from an average American.
The German Weimar Republic created money out of thin air to repay their crushing national debt. That led to hyperinflation, the rise of Adolf Hitler, and yet another war that seemed like a fight for freedom but was really a conflict to restore economic order, forcing countries like Germany and Japan that wanted what others had to produce it themselves instead of stealing it.
The current economic crisis is bound to get much worse before it gets better. Before the dust settles, bullets will fly as nations revert to the tried-and-true might makes right way of getting others to capitulate. However, unlike World War II, in which the U.S. government was an ally of ordinary Americans, the federal government is now engaged in a stealthy war with them, seeking to undermine their liberties and erode the value of their money as they pretend to be on our side.
Americans voted for change and Obama delivered on his promise. Ya happy now? If you are, just wait until Barack and his buddies are through with you.