On Inflation And The Preservation Of Value

I’ve told you before: every Central Bank in the world has a single mandate written into its statutes—fighting inflation. Or preserving the value of its currency, if you prefer, which is more or less the same thing. In the name of that Valhalla, which serves as an excuse, Central Bank governors tend to say and do nonsense of the highest caliber.

Mostly to hide their own incompetence and conceal their immeasurable uselessness, not to mention to cover up unfit economic policies put into practice by inept governments.

The monetarists came up with the idea that inflation is caused by too much dough in circulation, arguing that if a kilo of tomatoes sums up the whole domestic product, and the money supply is a thousand pesos—to keep it simple—then the price of a kilo of tomatoes becomes exactly that: one thousand pesos.

If you print money, say another thousand pesos, without producing a single thing, the price of the kilo of tomatoes, represented by the money supply, automatically goes up to two thousand pesos. Ergo, inflation.

That is why—life is simple—the governor of the Central Bank said she was against a new withdrawal from pension funds, because that increase in available money would translate into higher inflation. QED, as some math teachers proclaim at the end of a proof (quod erat demonstrandum, which was to be demonstrated).

Now, the money supply that matters is not what a measly Third World country like Chile prints, but a somewhat more complex and important aggregate.

At the time of the Bretton Woods agreements in July 1944, Mon Général de Gaulle argued that the dominance of the dollar would give the US the outrageous privilege of exporting inflation to every country in the world, since nobody at all controls how many dollars are issued.

So the Empire pledged to back its money with gold reserves, a joke while it lasted.

On August 15, 1971, taking advantage of the summer lull, President Richard Milhous Nixon put an end to the convertibility of the dollar into gold. This ended the gold standard on which the value of currencies had been fixed for two thousand years. The US government gave up (unilaterally, author’s note) defending the price of its currency, previously set at US$35 per ounce of fine gold. (…) This de facto devaluation of the dollar marked the end of the post-war monetary stability brought about by the Bretton Woods agreements. The currencies of every country began to “float” in an apparently disorderly way: their exchange rates change from day to day so as to balance the trade balances of the different countries…

Les Chroniques d’Herodote

From then on… the US printed all the more money as its domestic production shrank, and its trade deficit grew. In plain English: the US imports much more than it exports, consumes more than it produces, and pays with green toilet paper.

I’m not the one saying it; everybody and their uncle knows it. Go and see for yourself. Search the Empire’s own websites and you’ll find the following—you’re welcome, any time!: What’s the national deficit?

A deficit occurs when the federal government’s spending exceeds its revenues. The federal government spent US$1.61 trillion more than it collected in fiscal year 2023, resulting in a national deficit.

US$1,613,421,672,350

Fiscal year to date (since October 2022), total updated monthly using data from the Monthly Treasury Statement (MTS).

On top of that, the US trade deficit runs at around a trillion dollars (a million million) every year, a deficit happily covered by printing green toilet paper, open-bar style.

That flood of runaway dollars, printed freely, is cheerfully spread around the world, and Chile, as befits a colony, gets its share. The possible withdrawal of future pensioners’ savings, compared with the volume of runaway dollars that comes our way… is peccata minuta, small potatoes, as an old acquaintance of mine used to say.

Especially if you consider that, with the noble aim of fighting the pandemic (the laboratories that came up with questionable vaccines remember it with tears in their eyes…), between 2020 and 2022 the US printed close to 6 trillion runaway dollars, while the ever-obedient European Union printed some 3.5 trillion runaway euros of its own. In other words:

US$6,000,000,000,000 / EUR 3,500,000,000,000

If you were paying attention, that’s when an inflationary fizz appeared, or rather reappeared, which led the Central Bank governor at the time, none other than the very self-satisfied Mario Marcel, to declare, cool as a cucumber:

These days, the current Central Bank governor has stated:

As Rossana Costa herself puts it:

Good grief!

So the poor are to blame for poverty. Twice over.

If, forced by necessity to use their extremely voluntary savings to cope with their miserable lives, they have to take some of that money back, then on top of everything they are to blame for the inflation that eats away at the purchasing power of their meager resources. And for an old age with no provision, no pension, and no one in the world to look after them.

By now you’re wondering… And… the condom? It’s the crocodile-skin condom, size XXXL, lined with elephant hide, that you’ll have to climb into so that the parasitic political class stops taking advantage of you.

Consider yourself warned…