wage and price controls 2

WAGE & PRICE CONTROL 2

Yesterday we talked about inflation, the lead up to wage and price controls.  Nobody likes inflation, but don’t forget that precious metals are not the perfect system either.  Rome diluted theirs.  Spain caused inflation even using gold, after they started looting the New World ( here is a fun filled fact about Spain.  Prior to our war with them, they had already seen thirty years of war in the Philippines and Cuba.  We only so easily defeated them after that counterinsurgency campaign weakened them economically.  Does this ring a bell for any of you? ).

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Britain had a gold economy, then significantly increased its stock genociding Boer women and children, yet still lost an empire a few years later by spending it all on the Great Colonial War.  In the end, it doesn’t matter what trading medium you use, you must have resources backing your currency.  You are only reading this in relative comfort because the US started backing its dollar by oil, after it lost its Industrial War capacity, its gold and its entire economy.  Otherwise, we wouldn’t have waited fifty years to Balkanize or have our Civil War Two.  Which if coming are not because “commies”.

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The Statists are retarded, thinking that inflation no longer contained by global oil control will pay for the illusion of growth.  But they will try, because someone will try for the brass ring of power and wealth, selling the rubes a fantasy.  Don’t join the Statists, be they commies, conservatives, globalists or fascists.  Decentralize to tribe or hermitage.  Anyway, inflation has to accelerate.  Not because of any particular political belief but because it is the only avenue left for growth.  When resources contract, ALL systems great or small use inflation to keep the system going a little while longer.

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That turns to hyperinflation.  Followed by either collapse or, if the system still survives, completely new government and currency.  If the same government keeps power, they must “do something”.  Like what?  Return to a gold standard?  There is no more gold ( if you believe Fort Knox has anything more than thinly plated gold tungsten bars, I have a bridge going to Santa’s Workshop I’d like to sell you ).  They try wage and price controls, even though that never works.  But who cares, right?  The idiot voters will believe anything, like Gore Warming or Professional Sports Teams Need Funding.

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Actually, if you think about it, the economically imploding NFL is pretty damn funny.  Sports teams get free stadiums, taxpayer funded on BS promises of tourist dollars.  They are supported by deluded fans high on vicarious pseudo-combat and engineered competition.  But as soon as their far bigger fantasy of countrywide vicarious real combat and global competition is endangered, someone trying to pull the monkey’s paws off his eyes or ears, they reject the original fantasy.  The same people smothered by the flag to nap soundly also think the government allowing its protected bank to inflate money will fix the problem.

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I’ve read arguments before claiming hyperinflation is impossible under our current system.  But this ignores how our current system is failing, quantitative easing and other factors.  What if they are right, though?  After all, there are probably millions of people with better understanding of economics than I.  What if there was never hyperinflation?  Okay, what if there is only 1970’s inflation?  What if there is only 20teens levels of medical inflation?  How long can you last with twenty percent inflation a year?  That level already decimated the middle class, leaving only the 9% strawboss population to give the illusion we still have one. 

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What you are already seeing is wage and price controls, but in a stealthy manner.  It is unofficial rationing.  We would get official wage and price controls if hyperinflation ever started.  We already had that once under Nixon ( and that was without the “hyper” part ).  We had official rationing in WWII.  Now it seems we cannot have the government bothered by either one.  Just as they cannot be blamed for censorship, allowing Silicon Valley to impose that, one wonders if they will also ignore the required rationing.

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Rationing allows an item to stay in stock, rather than being bought out by bidding up the price.  This would be the way to go, if hyperinflation were to be avoided.  Right now, there is an informal rationing by price.  So many people have so little money just slight increases in price are damping down demand.  Look at the trouble auto manufactures are in, a three to ten percent decrease in sales from a year ago.  Ouch.  And that was from raising interest a mere two percent.  That is the squeeze from medical and rent, eliminating all other budget items.

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As jobs disappear.  That itself is a wage control.  Wages, adjusted for true inflation, continue to drop.  In a lot of places, even if jobs are available it literally does not pay to work, the wages are so low.  What is controlling price?  Demand destruction.  As jobs disappear and wages fall, all goods are in less demand.  Medical care is forsaken, as homelessness rises.  That is just the opening salvo in the process.  All consumer goods are in far less demand as before.  As population rises.  Why do you think the first casualty of demand destruction were malls?

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Even for a poor boy like me, malls used to be a destination.  There was 99% window shopping but I could always afford a pretzel, Orange Julius, a See’s Candy sucker, a magazine from the book store or a Nerd Boy game from the hobby store.  I stopped going as malls mostly just turned into clothing stores ( the initial wonderful mark-up and then the constantly decreasing quality kept profits high enough to encourage the dogpile trend ).  First, the highest priced place for stores failed and now the stores anywhere are failing, in the least needed, highest marked up retail sector that few actually need.

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It is just triage.  The least needed items are the first casualties as prices rise and wages fall, as unemployment explodes.  Demand destruction is doing a great job keeping prices under control.  Although it does seem that in a lot of businesses the actual prices usually seem to be at or below cost ( as the joke goes, they will make it up on volume ).  All this of course is giving the illusion that inflation is low or under control.  One almost has to wonder, though, is it illusion?  This is relative, after all.

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If inflation is in fact twenty to thirty percent a year, mostly disguised with quality decreases ( most of us cannot choose to pay more for everything to get better quality.  One or two things?  Sure.  Everything? ), and we are paying for the reduced visible price increase with demand destruction, might this be pointing to the PetroDollar ALREADY having collapsed?  I’ve eluded to this before.  If there are no more foreign Treasury purchases, the numbers held up by fake country buying actually conducted by the Federal Reserve Bank, if we are buying our own debt, has the trend already been countered?

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Now, obviously, Treasuries are still being used for SOME oil purchases.  But I’m getting a feeling that those countries rejecting, officially, dollars for oil, are putting Treasuries on the market which are bought by those still participating, with a net effect that no new ones are being sold.  Meaning we are already in a situation where no other countries are importing our inflation.  Will we still see hyperinflation, if the main cause of such has already occurred and countered by the bankers?  We might just see Higher Than Comfortable But Never Wheelbarrows Levels of inflation as our system rather than exploding just limps along.

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Not to claim that this is a manageable level of inflation.  ANY inflation is, long term, unmanageable when wages fall.  I’m merely postulating that there might not actually be this huge overnight shock we are expecting.  More the current levels of living lives of quiet desperation, worse, every year, the rest of our lives.  Christ, we could be England!  Although you have to hand it to them, regardless of how humped they are socially and culturally, they did a bang up job easing into their imperial collapse ( Russia did better but to be fair, they have the resources ).

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Tomorrow, let’s explore this long collapse.  I never thought I’d be agreeing with Kunstler-damn.  Well, I’m saying it MIGHT be a possibility.  We do tend to panic easily here.  Continued.

( .Y. )

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note: I just can't help but love Dark Mountain Dude.  Here in this article ( click here ) he offered up a YouTube video that is beyond priceless, funny as hell here .
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