In the evening to go for a late night snack, the owner of the barbecue stall gave me complaints: “10 yuan to buy 5 peppers, I grilled them and then only sell them for 3 yuan at most, others still think it is expensive, how cheap is my labor?”
Yes, the price of everything is going up, except the labor and income of ordinary people!
As mentioned before, in the thousands of years of human economic history, there is a self-evident truth: the interest rate of money can be infinitely high, but not infinitely low, the minimum interest rate limit is 0. Because, everything that is called “wealth” has a cost of acquisition and scarcity, in order to exchange different types of wealth, mankind invented the concept of money. In order to exchange different types of wealth, mankind invented the concept of money, using the value of money to identify the scale of wealth – as a representative of wealth, of course, money is also scarce.
Because of this scarcity, you have to pay a cost to borrow money from others, and this cost is the interest rate, and we call the interest rate paid in a year, as a percentage of the amount borrowed, the “interest rate” or “rate of return”. Regardless of the real interest rate or nominal interest rate, all the behavior of the interest rate below 0, itself is a violation of the laws of nature, from the long-term history of human civilization, to put it bluntly, this is to be condemned by God!
You have a barrel of honey and someone promises to lend it at 10% interest, but when you return it, the weight has increased by 10% and you find that 20% of water has been added to the honey.
Of course it’s a liar with flowery words!
You have a barrel of honey, someone wants to borrow your honey, not only do not pay you interest, but also in turn, want to confiscate part of your honey to him as interest, may I ask what kind of person is this person?
Of course it’s a son of a bitch robber!
Since 2014, central banks in Japan, the UK, Europe and the US have, through sky-high money printing and bond purchases, all kept their real interest rates on money below zero levels – and even, like in the Eurozone and Japan, sometimes simply let nominal yields go negative as well.
So, the current central banks of the world’s major economies can be divided into 2 categories.
Either, they are rhetorical liars; or, they are son of a bitch robbers; and there are central banks that are liars for a while and robbers for a while.
It is also because they have kept the real yields on national treasury bonds, below 0 for a long Time, that smart people have developed a persistent doubt about the faith in credit money.
Since 2014, U.S. tech stocks, Chinese real estate, and Gold and bitcoin, as a whole, have continued to soar amidst the plummeting price of the king of commodities – Crude Oil. What they reflect is not so much an appreciation in the value of any asset per se, but rather smart people fighting against a frenzied currency bubble created by central banks.
Saw a picture from the Bank of America on asset bubbles, which lists the major asset price spikes that have occurred over 40 years since 1977, and Bitcoin is one of the most notable. So, the headline is called: Bitcoin is the Mother of All Bubbles?
The Mother of All Financial Bubbles is Bitcoin? (Source: Bank of America Global Investment Strategies Institute)
What a laugh, can they even figure out what the real bubble is?
In fact, the gold bubble around 1980, the Nikkei bubble around 1990, the Thai asset bubble around 1997, the tech stock bubble around 2000, the US housing bubble in 2006, the Chinese stock market bubble in 2007, and now the bitcoin bubble and the tech stock leader bubble, if you analyze them in detail, almost every one of these bubbles originated from the credit money bubble (interestingly enough, the Hong Kong and mainland real estate bubbles are not listed, probably because they didn’t think housing prices were going up high enough)!
In my opinion, except for the credit currency bubble itself, the other major asset classes, in fact, are not called any bubble.
The chart below shows the expansion of central bank balance sheets in the 10 largest Western economies since 2006, where dark blue, light blue and gray are the balance sheets of the Federal Reserve, the ECB and the Bank of Japan respectively, while the right vertical axis and the red line, represent the ratio of central bank asset size to GDP in the G10 countries as a whole.
Central Bank Balance Sheet Expansion in the 10 Largest Western Economies since 2006 (Author’s Blog)
As previously stated, the size of money printing in the world’s major economies since March 2020 is greater than the size of human money printing in the 5,000 years of civilization prior to 2008 combined! To not call this a bubble, but to turn around and say something about bitcoin and gold rising is a bubble is simply calling a stag a horse and turning black and white!
As the value of central bank assets / GDP is getting higher and higher, even more than 100%, in the future, the growth of human GDP, all have to rely on the central bank, only the central bank printing money to create economic growth, the entire human race, are dependent on the central bank to feed it!
In the process of central banks to feed the people of the world, the new crown Epidemic broke out, billions of people around the world were grounded, countless enterprises went bankrupt, countless people lost their jobs, the global industrial chain, supply chains have been seriously damaged, in addition to those who can desperately send money to the people of the international reserve currency countries, the vast majority of people in the world have significantly reduced their income, Life has become more difficult.
However, the prices of almost all major asset classes, are drifting skyrocketing – including Food, which the central banks are unable to produce. Russian food prices, which rose 6% in a single month in November, while the Russian people’s income fell 5% in the third quarter compared to last year.
You should say, no ah, Russia is the world’s 6th largest food producer, but also one of the world’s major food exporters, 20% of the international market exports of wheat supplied by Russia, food production and not heard of the impact of the epidemic and reduced production, how the price increase?
The answer is – because foreigners with dollars to buy, so up!
Why did foreigners’ dollars become more?
Of course is the Federal Reserve + the U.S. government to the Americans crazy money, the Americans, of course, take the dollar to buy the world to buy buy, such as Vietnam, China, of course, earn a lot more dollars, of course, the ability to import food at higher prices ……
This is the transmission path of world Inflation.
As soon as the price of grain in Russia rose, the Russian government introduced measures to impose a 30% tariff on exports of soybeans and an export tariff of 25 euros per ton (about 200 yuan) on exports of wheat, and from February 15 to June 30 of the next implementation of the total amount of wheat, rye, corn and barley that can be exported does not exceed 15 million tons of quota restrictions (which is much lower than the normal export figures for the same period).
This means that the supply of wheat, rye, corn and soybeans on the international market is going to be reduced, so, does not that mean that prices are going to rise?
The main food that people around the world eat, which is wheat and rice. But rice, too, has begun to rise in price.
According to reports, in 2020 Vietnam began to import rice from India, the first time in decades, this thing is too much!
— because, Vietnam has been the world’s third largest rice exporter, for many years its rice exports, second only to India and Thailand, the result is now not only not export, but also to buy, you say rice to increase the price?
Not only Russia and Vietnam, the world’s most important several food and agricultural products exporters, such as Brazil, Argentina, Canada, also began to do, Argentina suspended corn exports, soybean exports wildly increased 33% tariffs, according to the Argentine Ministry of Agriculture, mainly to ensure that the local food supply is sufficient …… as the world’s largest food exporter, the United States food producers, on the one hand, there is the government to send money to high subsidies, on the other hand, the global food prices rise happily ……
Wheat and rice prices of staple foods have risen sharply, while soybeans and corn, which are supplementary grains or raw materials for meat production, have also soared, and in the near future, are bound to bring about a rise in meat prices around the world.
The United Nations Food Programme, which warned that the plague could trigger a record food crisis when the epidemic first started in April 2020, seems to be gradually playing out around the world. Is this the “no inflation” that the central banks of Europe, the US and Japan are talking about?
The barbecue stall owner of that pepper, why the price will rise, is not an isolated phenomenon, that is in line with the international!
Since March 2020, the Federal Reserve has been printing money like crazy, and the growth rate of broad money in the United States has hit a record high. But, the Fed still swears by it and sees no signs of elevated inflation, printing money is justified, printing money is good, and the only way to save the American people from the epidemic is to print money and give out money.
I think the Fed and the ECB and BOJ may all be suffering from selective Blindness. According to the Fed’s own data, every spike in dollar M2 growth over the last 100 years, followed by 1-2 years, has brought a spike in US inflation numbers, never an exception!
A look at the changes in broad money volume (M2) and the consumer price inflation index in the US over the past 100 years (source: U.S. Historical Statistics Administration)
This time, the Fed printed trillions of dollars furiously, and the growth rate of broad money M2 exceeded the period of the Second World War, the highest in history. Under such circumstances, what makes the Fed still honeyedly confident that it actually thinks it will not trigger serious inflation?
Price increases are inevitable.
Asset prices have risen greatly for respect, U.S. prices temporarily do not rise, prices in countries and regions that provide goods and services to the United States will rise, Chinese prices do not rise, prices in Africa, South Asia, Southeast Asia and Latin America will also rise, and then conduct back to the United States, Europe and Japan.
In this era of global economic integration, whether the United States or Europe and Japan by the over-issuance of currency, the first feedback to the capital markets of developed countries, followed by the economies that provide goods and services to the United States, in the United States after a big rise in capital markets, from the United States to earn a trade surplus economies such as China, Southeast Asia, Japan, immediately prices rise in the immediate future. In the field of production, productivity affected by the epidemic economies ex-commodity, we have watched it prices skyrocket – these are always blind to the crisis, in fact, more should make us feel afraid, this crisis is called the gray rhino. More frightening than the black swan is the gray rhino, because it is not only very destructive, the probability of occurrence is also very high.
Obviously, in the central banks in 2020 regardless of the cost of water, we will soon usher in a global inflation, the U.S. dollar euro such global currency, naturally, can be bought and sold globally, ruthlessly scavenging minting tax, the vast majority of economies that are not international currencies, the general public, not only to be plundered by international currencies such as the United States and Europe, but also have to bear the cost of their own currency overdraft ……
Only the central banks and governments that control the power to mint money are high up on the ladder.
The decision makers of the central banks are creatures made of special materials, forever looking at the masses from the perspective of God. They feel that those earthly sufferings caused by inflation are insignificant, and that only catering to the president, catering to political speculation, and constantly creating trillions of dollars of money out of thin air is the eternal meaning of their lives on earth.
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