“Inflation has always been an important resource of policies of war and revolution and why we also find it in the service of socialism.”
— Ludwig von Mises
“This cheeseburger explains your bigger grocery bill,” reads a headline in Politico on the biting edge of inflation. “American consumers are seeing food prices rise at the fastest rate in decades. Supply chain snarls, labor shortages and climate challenges (plus the conflict in Ukraine) share the blame.”
This week, as we strove to relate how “inflation” – a nebulous economic concept at best – ripples through the economy in simple terms, we came across Politico’s nifty and opportune graphic depiction of why prices are going up.
Prices of what? Everything. Here’s a quick and dirty version. Politico’s piece digs into the “why” behind the price increase for each commodity:
The Bun + 7.1%
The Bacon + 18.2%
The Egg + 11.2%
The Avocado + 39%
The Tomatoes + 1.7%
The Lettuce + 12%
The Mayo + 14.9%
The Cheese + 3.1%
The Beef + 16%
Here’s how we approached inflation, the war, hard assets, wine and “where the money’s at” this week.
The last great inflationary cycle we experienced in the U.S. was back in the 1970s – more precisely it began during the Great Society spending spree of the Johnson administration in 1965. And didn’t end until the much ballyhooed Fed Chair Paul Volcker hiked interest rates up in the 20% range 16 years later. “The deeper inflationary psychology takes hold,” the Hustle surmises, “the harder it is to shake off and the longer the cycle continues.”
Root causes of our current our current inflationary psychosis as we’ve been wont to express here in these missives: supply chain disruptions (courtesy pandemic lockdowns among other things); higher than expected demand (goosed by federal gimmie/stimmie checks and historically significant, and radically experimental, zero-to-negative interest rates); and for the trifecta an “unexpected” invasion of Ukraine by its larger Eastern cousin…
The mainstream narrative has been so dialed-in on the atrocities of the war… and the efforts of celebrities to raise money for Ukrainian refugee relief… the root cause of the war is only now gaining some ink. “Russia’s Gazprom continues gas exports to Europe via Ukraine,” says Reuters. “Ukraine’s pipelines are still carrying Russian gas to Europe,” says a more expansive piece in the Washington Post. “Ukraine Demands Everyone Else Boycott Russia While Making Billions From Russian Gas,” reads the Front Page Magazine.
Seems like a revelation. Injustice. A travesty. Oh, how the Enlightened Elite Establishment (EEE) must be enraged. Or are they? It is rather entertaining, we have to admit, watching them funambulate their way around “moral outrage” and the reality of the global energy and food markets. “Despite mainstream financial media’s portrayal of the war as a geopolitical phenomenon,” comments James West, our Wiggin Sessions guest, “where Vladimir Putin is trying to reunite Russian Federation from before the wall came down, this is completely erroneous and false and fails to look at the real issue.” Mr. West continues, rather animated…
Peter later tweeted “The Top 5 Reasons to Consider Gold in Inflationary Period”. They are:
- Store of Value
- Inflation Hedge
- Economic & Political Instability
- Rising Government Debts
All things, we have found ourselves concerned with at one time or another (sic, ahem, cough…) So, yeah, retweet because we agree. It’s like a thumbs up emoji.
But in the background is all this noise about Elon Musk buying a 9% share of Twitter… getting offered a board seat on Twitter… denying said board seat… then making a bid to buy the whole company for $45 billion dollars.
The statement Musk released with his offer states, among other things, this:
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form.”
We jammed with Jimmy Soni yesterday, who just released a book yesterday on Musk, Peter Thiel and the team that founded PayPal. There aren’t many industries this group has taken an interest in that they haven’t overhauled…
No surprise, this week inflation clocked in at 8.5% on the consumer price index (CPI) in March. Producer prices (PPI) rose at an 11.2% rate – the highest jump in prices since the government began publishing the number in 2010. “At that pace,” Bill Bonner commented blithely yesterday as his custom, “the real value of the government’s $30 trillion trash pile of debt will be reduced by $3 trillion this year. And the money shufflers in Washington get to keep on shuffling the cash to their friends, clients… and most important… to themselves.”
As we have laboriously detailed, the Fed has one hand tied behind its back. The other is wedged between a rock and hard place of their own mechanition. “The usual guidance to fight a rising cost of living is to buy precious metals,” Dave Gonigam advises in the 5 Min. Forecast, “which the late John Pugsley thought was a fine idea… but he preferred to attack the problem at the source.”
James West provides his own strategy for going “where the money’s at”:
You can catch our full interview with James West, right here.
Okay, let’s file away this inflation psychosis idea for next week when we discuss the world’s first global “social media war” and “network swarm” with Global Guerilla, John Robb.
Follow your bliss,
Founder, The Wiggin Sessions