by Ramin Mazaheri for The Saker Blog
The West’s central banks – so uniformly promoting the neoliberal version of capitalism, so willing to subvert democratic votes and with such an atrocious track record – are obsessed with inflation; for the European Central Bank it is the only job they are officially tasked with.
Personally, given these realities…. I think inflation must be good!
I’m not being willfully contrarian because the reality is never admitted in the West: inflation is good for some societal sectors and bad for others.
High-finance must know that inflation is not the total scourge we are told it is: if they think inflation is so important, then why haven’t they lost confidence in the ECB for years of failing to achieve its only mandate – to hit inflation targets they set?
If it is indeed correct and useful to subvert every economic policy to the fight against high inflation – and this is indeed the Western reality -then why then has the West had both low inflation and low economic growth?
This article refuses to take capitalist ideology as a given, and it holds their feet to the fire for their terrible, unequal, inferior-to-socialist-central-planning results.
When can we finally forget about poor Germany in the 1930s and all the “trauma” inflation caused them? I can’t count the number of times in the past decade I have read of this era as a so-called “justification” for Germany’s heartless, ineffective and self-serving pro-austerity policies. Iran has inflation problems and yet I never hear anyone, including Iranians, say that we are “traumatised” or “scarred” by inflation… sheesh, grow a backbone.
When it comes to the Western Mainstream Media inflation is usually presented as a problem of the past or in socialist-inspired economies like Iran, Venezuela and Zimbabwe… and yet the number one complaint of French people in the past decade has always been what is euphemistically called “purchasing power”, i.e. inflation. Inflation – the inability to buy as much as you used to with the same amount of money and/or hours worked – is obviously a huge concern here, despite there being “low inflation” officially.
Clearly, a reboot on viewing inflation is needed in the West….
The unsaid reality of inflation: Good for the many, bad for the (rich) few
Before starting, the way the West judges inflation is fundamentally false and renders most discussions absurd.
They do not incorporate housing costs into inflation rates, even though housing is everyone’s single biggest cost. Food and energy, which are huge household costs, are not included because they are allegedly “too volatile”! In the US medical insurance costs are not even included either despite the huge weight they play in US household budgets. Who is devising these gauges and how can we politely tell them not to come back to work anymore?
It should be clear: capitalist economists have purposely devised instruments and measurements which are very little connected with the realities of everyday life.
It is also clear to everyone on an anecdotal level that that – to hell with the government statistics and however they fudge the numbers – nobody in 1980 would have imagined that a can of orange juice could ever cost 3.50 euros at a French highway rest stop in 2010. A time-travelling Frenchman from 1980 would have said: “Wow, we must have had rampant inflation!”
However, we will benefit from persisting in our discussion of inflation despite these obviously false terms….
The reality is that inflation is complicated, but not inexplicable. It is certainly not one-sided and yet it is painted as “bad” across the board by the mainstream media, and certainly the financial media and their high-finance audience, neither of whom will never admit that inflation is often good for the 99%, and positively disastrous for the 1% to whom your rent and interest payments flow.
Part of our reassessment starts with grasping how in the most-globalised economies of the West inflation is especially inextricable from currency strength. A strong currency is undoubtedly better for the average person, as they have more purchasing power when it comes to imports. The higher a nation’s involvement in globalisation the more imports there are.
For example, because oil is so important to the average household in the 21st century a strong dollar/euro/yen means imported oil costs them less. Given the proliferation of free trade agreements, a little thing called “food” is also now routinely shipped in from elsewhere. Furthermore, many Western nations have far less domestic manufacturing than they used to, and thus their consumers rely on imports here as well.
Oil, food, basic manufactured goods – these are all rather huge considerations for any public servant actually concerned with the public’s well-being!
When I moved to France the euro was quite strong – nearly 1.60 dollars to 1 euro – and it was terrible… until I started getting paid in euros – then I was Mr. Moneybags anytime I went home! So why did the Eurozone’s leaders allow the euro to drop, when it was obviously much better for average people like myself? In large part because that’s what Germany wanted – they are an export-driven economy, and a strong euro makes products exported by Eurozone corporations more expensive outside Euroland. This political imbalance of the Eurozone, combined with Quantitative Easing, has dropped the exchange rate all the way to 1.10 dollars to 1 euro. I am no longer Mr. Moneybags, indeed, and the Eurozone’s average person has similarly been economically weakened.
This personal (and pan-Eurozone) anecdote helps relate how a weak currency is better for three sectors of the economy:
Firstly, it lowers the foreign selling price for companies who export… which is not all companies, crucially. Even more emphatically, the majority of workers in the US, to give one Western example, do not even work in corporations, much less corporations which export. Therefore, policies which claim they are “pro-job” because they are pro-corporation is not accurate – what instead is accurate is to say that they are “pro-corporate jobs” which, again, is not all jobs. However, because corporations easily manipulate the West European bourgeois political structure, policy is made for their needs and not that of the average person, worker or community.
The second sector which benefits from a weak currency are bankers: a weak currency is good for them because they can get money and loans cheaper, and their debts are easier to repay. If you borrow money in dollars at 0.2% for 3 years – that is very cheap; however, if over three years your currency strength drops 10% relative to the dollar, the amount you have to pay back is more than just 0.2%. Given the proliferation of QE policies and the subsequent rampant proliferation of socially-useless investments – the stock market, luxury goods, luxury housing – it should be very clear why bankers do not want higher interest rates (which, by reducing quantity increases demand and thus causes a stronger currency): they want to keep borrowing cheaply.
There is a third sector of the economy which benefits, and perhaps the most parasitical. Unlike corporations and bankers they are not distant strangers but people whom we all touch personally in our regular lives
Landlords and debtors – those most empowered by low inflation
Look: If the price of a kilo of fruit went up to 1,000 euros tomorrow I’d be thrilled… because it means a kilo of fruit is roughly equivalent to one month of my rent in Paris.
And wouldn’t that be a load off my budget, my mind, my burden, etc.? Rent is my biggest concern, like most people.
Along with banks, the propertied class benefits immensely from low inflation. Anything which could cause higher prices – and thus higher wages to pay those prices – necessarily deflates the worth long-term rental contracts.
This positive effect of higher inflation would be least felt in places like the US, where landlords have all the rights and can (incredibly) raise the rent at a moment’s notice, but in places like France apartments have long-term contracts (usually three years) but there can only be one increase per year and it is capped by the government (usually around 2%). A spike in inflation would thus not affect my rent for at least one year, but maybe longer. However, inflation would hugely affect the enormous profits of the propertied class, whom we all hate and resent for taking 1/3rd of our pay checks in return for merely staying out of the elements in a humble abode.
Of course, such a point of view – that landlords are parasites off my sweat, wages and risk – is never heard in the West.
(I did effectively pass this on to my landlord recently and… our relationship has rather deteriorated, LOL. I could not care less – I asked for the first terribly minor, incredibly non-aesthetic repairs in 7 years and she acts like I asked to install a sauna, whirlpool and tennis court! Maximising profits are all that matter to her, and not the small fortune I have transferred to her bank account the past decade.)
Last month California capped annual rent hikes at 5%… but plus inflation. The propertied class in the US is merciless and controls all the political levers.
Inflation means higher prices, sure, but that is not an issue if wages rise as well. Economists rightly discuss both “price inflation” and “wage inflation”. One area where there has been no inflation for 40 years in the West is wages – this why we are all as shocked to pay 3.50 euros for a orange juice just as much as our imaginary French autoroute traveler would be.
So if the price of fruit reached 1,000 euros per kilo but I received a commensurate wage hike, even just one year of not-sky-high rent prices translates into huge savings for me.
Studies say 60% to even 80% of Americans live pay check to pay check – you may scoff at the notion of higher inflation paying off for those (of us) who live like that, but we have nothing to lose but our chains. This article addresses how the power of the propertied class can be reduced, and inflation can be one of those routes.
Indeed, the “propertied class” – people who own more than 1 home to rent to others – is the biggest class war. Forget “the 1%” – sure, they are bad, but the propertied class is really what separates the haves from the have-nots in the West. By cutting out the capitalists and their parasitical middlemen, socialist China has created a society where 90% of Chinese own their own homes. The insecurity caused by landlord usury has incredibly negative societal and personal consequences, and if it takes price inflation on everyday goods to end it – bring it on. I have an economic leg to stand on because in theory price inflation leads to wage inflation.
If a kilo of fruit cost 1,000 euros, then I really would be kicking myself for not having bought a 40 square meter apartment in Paris (at the mere average cost of 4-500,000 euros in a cheap part of town), because then I could have paid off my apartment’s sale price pretty quickly.
Thus, Western economists and journalists are quite biased where inflation is good – asset classes of the rich like stocks and real estate – and where inflation is bad – wages and prices on everyday goods. All of these types of inflation – just like currency strength – benefit some sectors and hurt others. Because in the West private corporations own the mass media, this reality is never said much less explained: Inflation is optional.
Western economists and journalists also adore another area of inflation, but in one area which they prefer to never discuss: debt. Being against Islamic notions of finance, compound debt is viewed by this class as a business victory and not a moral crime.
A rise in inflation also means a deflation in the cost of debt: the principal’s price is fixed, and the interest is at a fixed, contracted rate – thus debt is made cheaper by price inflation. With price inflation wages will rise, but debt will remain fixed, thus debt is paid off faster – this is not at all what debtors want to see happen.
Debt is owned by the 1%, the propertied class is roughly the next 10% – these are the groups for whom Western economic policy is targeted and for whom Western Mainstream Media financial coverage aims to protect and support. Inflation threatens the debt and financial instruments which they use to keep the other 89% in neo-serfdom.
Now that we have established who benefits from inflation and who doesn’t, we should grasp the most vital fact in 2019: low inflation allows G7 banks to print huge amounts of money.
Inflation allows the massive money-printing to take place
This 11-part series uses as its jumping-off point the 2018 book Collusion: How Central Bankers Rigged the World by Nomi Prins, a former Wall Street executive who saw the light and is now informing on the crimes of Western imperialism-capitalism. Prins gives a thorough and chronological account of central banker doings in key areas – Mexico, China, Brazil, Japan and Europe – ever since US banker crimes set off the Great Recession in 2007. The essence of her thesis is that the US orchestrated collusion among the central bankers of many of the G20 economies and the Eurozone in order to primarily save busted US banks, and then also to maintain the 1%-enriching policies of QE, ZIRP and no-strings attached bailouts.
“Here lay the crux of the central bank priorities. The central banks’ concerns and policies were mainly focused on price stability (or inflation), but with rates at zero and global growth slow everywhere, a rise in domestic inflation didn’t necessarily imply growth or better levels of employment (prices rise due to either scarcity or increased demand – increased demand can easily be manufactured by increased good jobs and increased wages (i.e. people can afford to pay more)). Using inflation as a goal post, then, was an implicit means for central bankers to align with hitting investors’ expectations and vice versa. In the absence of true inflation or growth, central bankers, especially in developed nations, could keep conjuring money, which flowed to banks and market speculators who borrowed it cheaply and in large quantities, because real inflation was so difficult to attain in a faltering economy.”
Prins clarifies, saving me the time, why prices on goods increasing is not necessarily a bad thing when they are commensurate with an increase in wages and in good job availability – it’s a sign of increasing demand, which creates more sales, production, profits, jobs, domestic spending, etc.
She correctly gets across the idea that low inflation is not always the good thing the Western Mainstream Media claims because it should also be associated with low economic growth when there is no wage inflation and also “good-job availability deflation” (this has been caused in Europe by austerity measures which take a right-wing rollback to the labor code), and this has been exactly the case in the Lost Decade of the Eurozone.
Higher inflation would certainly have been better than the last 10 years than the measures which were designed to somehow keep down inflation but also increase growth. These paradoxical measures obviously failed miserably for the average Eurozoner.
And she correctly asserts that keeping inflation down in the context of massive money printing – which should obviously decrease currency strength and increase inflation because there are more dollars/yen/euro than before in the market – especially benefits banking corporations who are the only beneficiaries of the massive money printing.
How Zero Interest Policies also hurt the 99% and not banking corporations
Prior to the Great Recession there was a simple way to stop the rising prices which central bankers are allegedly so very worried about – just increase interest rates. This gives more incentive to save, and it makes it harder to buy things which you must borrow in order to afford… thus prices fall due to decreased demand.
(The socialist way to stop rising prices is even simpler: to hell with the market and the producers – institute price controls. But that is not an option in the West. It is an option in Iran: they recently slapped a 40% tariff on chicken in order to keep more chicken in the country. Such a tariff is anathema to non-Trumpers in places like the US, but these are the types of moves Iran can endlessly use in order to make sure basic goods keep flowing to the People despite Western sanctions, and the People need meat.)
However, ZIRP has been instituted precisely because Western central bankers do not care at all about the 99% but care only about ensuring massively printed money flows towards banks and the 1% (which they have obviously kept for themselves and have not lent to the 99%).
Zero percent interest rates hurts the average saver, and that is perfectly obvious – why save at all? Why not spend your money instead on speculative investments, like the stock market?
In fact, zero percent interest rates achieve the fantastical trick of making time not worth anything. This is contrary to human history, human nature and certainly to long-term economic planning.
If Western central bank policy was oriented away from the 1% they would raise interest rates, which would reward savers and ultimately translate into a stronger currency, as the higher interest attracts more investors and thus fortifies the national economy. However, I related how stronger currency is bad for two, very rich, very limited sectors.
ZIRP also benefits corporations and bankers for the reason I listed: in the West European bourgeois/aristocratic system these two groups have greater access to taxpayer resources and government funding, and their lobbies are able to get enacted what benefits them. Banks and corporations can borrow for nothing and then charge you and me whatever they want for a loan with said money; banks and corporations can borrow for nothing and then buy their own stock and see a guaranteed price increase, thus a bigger yearly dividend check; banks and corporations can borrow for nothing and just wait until the next inevitable bust in capitalism, then buy cheap when the blood is in the streets; banks and corporations can flood the developing world with newly-printed money and wait until the next inevitable bust in capitalism to yoke them into compound debt servitude.
Because there is no demand – as wages have been effectively deflated, and as good jobs are both more scarce and more precarious – of course there has been no inflation… we didn’t need a central banker’s help with that! They were supposed to help that!
What’s more, ZIRP has helped provoke spells of deflation in Europe, which both reflects and causes economic hardship… unless you have access to QE money, of course.
In conclusion, to talk about actually encouraging inflation in the West leads to immediate extremism: this is why Western commentators immediately evoke Weimar Germany. It’s absurd to think that inflation in the right sectors – wages, prices and “good job availability” as opposed to debt and elite-owned asset classes – cannot be safely managed.
However, we must remember that Western neoliberalism teaches that, 1) the free market is essentially a wild beast about which we essentially know, can and should do nothing about, and 2) no one is less capable of effectuating positive change in the economy than the central government.
Given these beliefs – which are unfounded, faith-based beliefs and not facts – it is no wonder that the elite who control public discourse do not want anything which they cannot control… in order to maintain the debt-bondage status quo, of course. Managing inflation safely necessarily implies central planning, and despite the Great Recession and the looming Great Recession II (i.e., Great Depression II) Western culture abhors this idea… for some reason I can’t explain.
What QE and the lack of proper inflation have done is best put like this: instead of devaluing their currencies to pay for their banker crimes they have decided to devalue their economies, which is the subject of Part 6.
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Here is the list of articles slated to be published soon, and I hope you will find them useful in your leftist struggle!
Part 1 – Western central bankers: they’re God, they trust – a 10-part series on the QE economy
Part 2 – How QE has radically changed the nature of the West’s financial system
Part 3 – QE paid for a foreign buying spree: developing countries hurt the most
Part 4 – Iran vs Mexico: ‘economic inflows’ versus ‘economic independence’
Part 5 – Understanding the West’s obsession with inflation
Part 6 – The new ‘beggar thy neighbor’: wars to devalue labor, not
currencies
Part 7 – Blaming China for the Great Recession… to avoid emulating China’s (socialist-inspired) success
Part 8 – 1941, 1981, 2017 or today – Europe’s mess is still Germany’s fault
Part 9 – Don’t forget the real root of Brexit: fear of Eurozone economic contagion
Part 10 – Bankocracies: the real Western governance model
Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of the books I’ll Ruin Everything You Are: Ending Western Propaganda on Red China and the upcoming Socialism’s Ignored Success: Iranian Islamic Socialism. His work has appeared in various journals, magazines and websites, as well as on radio and television.
Inflation destroys fixed salary pay without constant union negotiation and bargaining. This is great for the employers who will give below inflation pay rises or even cuts with the excuse of ‘if we dont keep our costs the same then we’ll lose customers’.
Hi Ramin; Thank you for the analysis. I see you are planning an article on the real root of Brexit: You suggest it is driven by fear of Eurozone economic contagion. I suggest an even more powerful driving incentive for the English capitalist ruling clique is that they fear that the Eurozone will continue to move to regulate the international movement of capital through off-shore tax havens. I read that the EU has already started to take steps in this direction. This must really frighten the English Tories as their entire capitalist money game is propped up by their ability to run a massive tax avoidance and illegal drug and arms bazaar, and all the profits associated with that, through an unregulated serious of long established tax havens. It seems to me that Brexit is an attempt to prevent the EU from taking this honey pot off the ruling Tories. There has been some analysis of this on the internet and it strikes me as a highly believable core hidden motive for the whole ruling class Brexit scam. As far as I can see all other motives for Brexit that they proclaim are but covers for this little self defensive operation on their part. Your Thoughts and those of other please.
Hello Ramin,
As a former California Kulak, a money grubbing, Anarcho Capitalistic tool whose greatest joy apparently is to deprive tenants of a third of their income in exchange for a dry hovel to cower in while they watch cable Sunday Sports, I’d like to offer a slightly different take on inflation.
If you or I were to print up currency on a Xerox machine (even very good copies), we’d be despised by our neighbors as thieving no-good-nik counterfeiters who deserved whatever bad happened to us. Printing up extra pieces of paper in exchange for something your neighbor has doesn’t create extra wealth, even tho it gives recipient the impression of greater wealth.
If a government (“It’s not MY government”) prints up extra currency, the only difference between what it does and what a common criminal counterfeiter is that the Fed uses linen instead of cotton paper, and being the biggest local mafia has lots of quislings ready to suck up to them.
Inflation is essentially stealing from all of us; trying to figure out who is a net beneficiary (often the .01%, certainly those involved in financial centers) and who is hurt (usually the retired, the 90%, the lenders) is a mugs game.
We all try to arrange our lives so that thieves, burglars, and cut throats leave us alone (and in doing so, rob, steal, and hurt others).
It is only a couple times a century that inflation causes your apple to go to $1,000 and your rent to be equivalent to a sandwich. Unfortunately, that generally happens after the disaster of war, when society has been destroyed:
Weimar Germany, Zimbabwe ten years ago, France 1793. Be careful what you wish for.
Hi Snow Leopard,
Given the unexpected Dec 12 vote in the UK, I’ll bump that article up to publish it later this week.
Spoiler: I don’t get into this theory, but certainly the UK is far more dependent on illegal offshore banking than the many nations of the Eurozone.
My article simply goes back to the start and is factually and historically based: fear of Eurozone economic contagion is what started the process which directly culminated in Brexit.
Inflation has long been called the “Stupid Tax”
Like government lottery’s, it’s just another way to rob dumb people.
Given you know inflation, then just buy assets that rise with inflation.
End of story.
[ If your not sure what it means to buy assets that rise with inflation, then read Marc Faber’s book “Tomorrows Gold”, the best book out there on the history of inflation and the rise & fall of great city’s throughout history ]
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I think this article portray’s the “Wizard” behind the curtain in Wiz of OZ, pulling levers, the reality is GOV debt can only be controlled with inflation, which allows them to pay back less, or nothing at all.
There is no mystery here, the only problem is real ‘economics’ is not taught, not even at the university level, and certainly not on TV. You can download for free Ray Dalios book “Principals”, and learn it all from the richest man in the world, heck even in the 1960’s J.P. Getty wrote a book called “Getting Rich”, published by playboy magazine, where he explained exactly how to make a fortune. There is no mystery here, the problem is majority of mankind doesn’t listen, in all society’s only about 3% of the citizenry is “Engaged” in the real world.
The problem is poorly educated citizenry, who don’t understand the GOV game, and this game is played by all government’s on earth that ‘print’ their own money.
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Regarding counterfeiting, it goes on everywhere, not only gov can create paper money, but anybody can create crypto-currency, and anybody can start a business go public issue an IPO ( pull stock paper out of his ass ), and sell this stock for real cash. So there are lot’s of ways for GOV & people to print money, e.g. to create wealth from nothing.
Much of our modern times is called ‘financialization’ which just means that everything is a shell game, not unlike the book “The Little Prince”, where the accountants keep track of all the star’s and sell paper-ownership of every star in the universe.
IMHO you cannot fight them, you can only join them, otherwise you will live a life of poverty. Not in our lifetime will this charade end, long ago a German scholar wrote a couple of books called “Decline of the West”, which went into the +2,000 year history of paper money, he called ‘mercantilism’, and how all society’s based on such end in disaster.
Nothing new here folks, you either play their game, or live like a dog in Palestine.
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Why waste time posting here? I guess because rather than fighting them with words, if real revolutionary’s had financial education, and comparable financial power then they could fight the bastards who own the earth with comparable weapons. The way it is now ant’s with nothing fight giants.
Who ever you believe owns the Earth, it is not correct, they are simple renters who’s assets could be reduced to ashes if and when the actual owners choose to pull the trigger. The fact that they have not pulled the trigger in quite a while only suggests that something else bigger than ownership is a foot, and its called human evolution.
There seems to be three kinds of people who write economic analysis for the masses.
1.) The poor angry intellectual guy, who never gave a thought about getting rich himself, just went through life hanging out with poor people, trying to justify why they were poor. Why others are poor, and what they might do to change their lot in life. Hanging out with losers, is probably the #1 reason for failure, but like they say ‘misery loves company’.
2.) The poor young kid, who doesn’t want to live poor like his parents, so he study’s the rich, and learns “How they do it”, and gets rich himself, but he really doesn’t have time to write books, until he’s old and retired. He self study’s try’s to go to a good college, try’s to meet rich kids, and learns how they think.
3.) The professor type, a guy who played by all the rules, got his PHD, and by peer pressures, goes along with the official government narrative, hoping to get an appointment, think Greenspan, Powell, everybody at the FED. This type-3 will never get you rich or help you understand reality, by studying their material, as the narrative is just a technical fable for the priesthood. Where GOV is GOD, economics professors are their priests.
The only people that are worth studying is type-2, they did it, they figured it out, and generally they spend their remaining years trying to explain to other impoverish 3rd world kids.
The problem with studying the failure of GOV, is that its a hamster cage, there is no end. All Gov operations end in failure, so what’s the point of studying failure? You know how its going to end, as it always ends the same.
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Now there’s a new kid on the block “CHINA”, they raised a billion people in 30 years from poverty to middle-class, all the while the CIA dropped the majority of USA from middle-class to poverty.
USA gov politicians can’t stand China, because the truth would destroy the USA.
Today China generates 10X more new billionaires every month than USA. In the near future its going to be 100X.
How will CHINA end? Nobody really knows, but they continue the path of “FAIRNESS”, then it might work.
We all know the Western system is unfair, its been documented for 100’s of years. The Western system is just an extension of South-Sea Corp, Slavery, and caste; No different than India, just in the West its plantation owners, house niggers, and field niggers. (MMT-owners, white-collar,blue-collar)
If you live in the west you just have to decide what you want to be in life an owner, or a collar. If your old and have a child, then you need to help your child rise.
You have a ‘choice’. To be a parasite, or one of the parasitised. To be predator or prey. To be the immiserated, or the immiserator. Best is if you can also pervert your ‘religion’ to declare blood-sucking to be virtuous-perhaps you could convert to a religion that already holds that to be one’s purpose on Earth. Funny how greed has always been portrayed by nearly all the religions and philosophies on Earth to be a great sin, yet it is the very essence of American Exceptionalism.
Just sayin,
The problem with your argument is that you say all GOV operations end in failure, and then you point out China’s success, which also GOV. You contradict your self with your own evidence?
Funny take on the 3 types of economic analysts though.
China’s system of gvt works fine for China and its massive population, but it does nothing though to progress the human race through the mechanism of human body mechanics. To further this goal, you must be an American in America.
Alabama; What are you talking about with human body mechanics?
Its a pain in the neck, you really dont want to know, things like the ankle bone is connected to the shin bone, the shin bone is connected to the knee bone, the knee bone is connected to the thigh bone, ect…..and once these bones dont fit right for so many reasons, you get aches and pains in the morning and during the day that over a long enough period of time degrade the standard of living of humans and reduce the humans chances of a quality of life past 100 years. That’s kinda what I’m talking about.
I think westerners are just dummies. For example in america, lets say your parents die and you inherit the house. What does an actual person do and what does the eternal american?
The eternal american instantaneously sells the property, prefering to pay rent and but some overpriced shitbox.
In contrast, people elsewhere, people move in immediately, perhaps exchange the land for an apartment… It results in greatly reduced power of the landowner (because there’s lots of them, and people rely less on them).
I’m always weirded out how condominiums are considered a meme in the west, here like 99% of new apartment buildings are condominiums
Then on the other hand we dislike the idea of paying rent in the first place, far less accepting than others of such a position
The only people that I know of that don’t pay rent/mortage payment are squatters…………..with the majority of them squatting on stolen Palestinian land. You have to pay, weither its fancy coloured stones, beads, or shiny metal of some kind, it’s a pay as you go world……………..now what I don’t like is the excessive amounts one gets charged by the land owner to rent thier property………………..and the excessive, regressive, amounts of usury (ie: taxes) charged on any money borrowed, or spent for that matter. The problem; greed.
The ‘people’s president’, agent orange as he has been called, is screaming for negative interest rates and a much lower dollar. That will help the average, struggling person, won’t it? Who do you think he is really working for?
From what I have read in Mr. Mazaheri’s article, I have understood that inflation does indeed exist in Western countries, although the interest rate at which newly-printed money is issued to banks and rich corporations and individuals makes it affordable to them, while the burden of zero and negative interest rates is put onto the shoulders of ordinary people, whose revenue remains the same while prices for goods and rent keep increasing. Add to that the increasing scarcity of well-paid jobs and you have a recipe for the continued enslavement of the masses.
On a personal note, my parents are engaged in the real estate business, renting apartments to people in Belgrade. However, they are definitely not of the kind mentioned in this article, who take the rent but do not reinvest that money into the apartment or conduct repairs when they are necessary.
Another small detail is that the €:$ exchange rate is not €1.10 to US$1, but €1 = US$1.10.
Hi David of Rascia,
You understood it very well! There absolutely is inflation in Western countries, but the measurement data is so rigged and the media discussion of the topic so limited that people believe there isn’t… except for the time-travelling Frenchman from 1980 who would not believe a can of orange juice at a gas station could cost 3.50 euros! And for all the people born since 1980 who can remember. And even the ones born after who can’t find a decent job but have noticed that even 1-2% inflation over a decade, amid stagnant wages, really adds up.
Thank you for showing me my mistake in the €:$ exchange rate. My mistake was is even worse than you said!
I originally wrote:
“When I moved to France the euro was quite strong – nearly 1 euro to 1 dollar:”
That was a big mistake: it was a whopping $1.60 to €1 as recently as July 2008. Now it is all the way down to $1.10 to €1, as you pointed out. This drop has not been good for me in Paris, as am neither a banker nor a corporation which exports.
I hope people could understand my point even though I foolishly wrote that a €1 to $1 exchange proved that “the euro was quite strong”?!!?! I blame my editor for this huge mistake (me).
We are trying to edit this change for future readers. Thanks again
1-2% inflation annually adds up, that is!
Thank you for your reply, Mr. Mazaheri. I thought that it would be beneficial to point out this little flaw in an otherwise impeccable article.
As for the inflation which Western central banks place on the backs of ordinary people, I would label it “sneaky” inflation, since it is apparent in the growth of the wealth that the richest individuals and corporations have experienced ever since the 1971 Nixon shock, while the wages of working class citizens have been more or less stagnant.
One question that I would like to ask you is: what do you think of the role of gold and silver and their impact on the economic and financial circumstances of ordinary working class people prior to the Nixon shock?
I have noticed that before 1971, the inflation of gold and silver was relatively slow compared to today’s rates, meaning that the wealth of the rich classes did not grow as quickly as it does nowadays – after all, 1-2% inflation rate on wealth that is counted in the billions of dollars is significant!
“.. low inflation allows G7 banks to print huge amounts of money.”
If you consider the European countries members of the G7, it is the independent ECB that creates the money for France, Germany and Italy. All the other banks of the world, including Iran, have also an independent Central Bank.
An independent central bank really means that it is independent from their government. In other words, it belongs to the International Usurers. If you consider the level of debt of each country, the concept of “debt slave” starts making sense. This also means that those governments start becoming “independent” from the real needs of their populations. The Gilets Jaunes, in France, carrying signs reading “Mort à la dette” are there to confirm it.
Iran does not have an independent central bank. Neither does China.
Rather goes against the idea of having a socialist-inspired revolution….
The Central Bank of Iran is the same Bank that existed in Shah’s time. It was not nationalized after the revolution. Please read the following document that you can download from the web site of the Central Bank of Iran:
https://cbi.ir/page/4252.aspx
See chapter “Relation between Governments and Central Banks” and “An Overview to the Relations between BMJII and International Organizations”
What you are saying isn’t supported by anyone, nor is it supported in that link.
Wiki:
As of 2010, Iran’s Central Bank, is not able to conduct a “proactive” monetary policy (e.g. it needs Majlis’ approval before issuing participation bonds) and has no control over the government’s fiscal policy.[16]
Iran’s government clearly does not have relationship with their central bank as in other nations.
Iran does not belong to the “International Usurers” as you claim, which is why Iran is so hated. Iran’s Islamic Finance banks compose of the top 10 biggest Islamic Finance banks.
If you want to hate all bankers, fine, but they are not all the same we must admit.
A document issued officially by the CBI is not an opinion and should logically prevail over hearsay. The document confirms that Iran is an official member of the IMF. Accordingly, Iran therefore must remain in compliance with the Articles of Agreement of the International Monetary Fund. It states also that Iran has an active representation in the meetings of the IMF and the BIS. If the CBI was not independent, this would not be possible. The “Monetary and Banking Act” is also not my opinion, it’s a legal document stating at Article 10c that the” CBI enjoys legal personality and shall be subject to the rules and regulations pertaining to joint-stock companies in matters not provided for by this Act.” or in Article 1d that “The parity of foreign currencies in relation to the Rial, as well as the buying and selling rates of foreign exchange, shall be computed and determined by CBI in compliance with the State’s obligations towards the International Monetary Fund.”
The document, revised in 2017, is available here:
https://www.cbi.ir/page/2234.aspx
Iran hasn’t borrowed from the IMF since the 1960s. Don’t pretend that they work hand in glove.
Your document from the CBI seems to me like central bankers pushing for more independence, which is what all central bankers try to get. They obviously don’t have it in Iran. But if you want to keep believing “The Central Bank of Iran is the same Bank that existed in Shah’s time.” spread all the propaganda you want.
I don’t know why people love to use IMF membership as proof that Iran or others are “secretly neoliberals”. Here is the entire list of countries which are not IMF members: North Korea, Andorra, Cuba, Monaco, and Liechtenstein. I’ll concede that Iran is not as openly socialist-inspired as NK or Cuba.
Similarly, WTO membership is used against Iran, China and others as proof of rampant capitalism. Here’s the entire list of those are not part of the WTO: Aruba, Curacao, Eritrea, Kiribati, Kosovo, Marshall Islands, Micronesia, Monaco, Nauru, North Korea, Palau, the Palestinian Territories, San Marino, Sint Maarten, Turkmenistan, and Tuvalu. I’ll concede that Iran is not as openly socialist-inspired as NK and Eritrea.
People who believe that joining the IMF or the WTO automatically forces a one-size-fits-all approach to economics (neoliberal, usually) likely also spend much of their time studying the Freemasons, the Illuminati, etc.
This is the only place I have ever seen the Iranian Central Bank described as “independent”.
Frankly, this is one of the more contentious pieces (Hooray inflation? Yes.) in this series so I’m glad the only controversy I appear to have generated is this non-controversy on Iran’s Central Bank.
All members of the IMF are obliged to respect the Articles of Agreement of the IMF, see here:
https://www.imf.org/External/Pubs/FT/AA/
I’ll just take one example of the many rules each member is expected to follow: let’s take Article IV: Obligations Regarding Exchange Arrangements. Section 2. General exchange arrangements, point(b): The important words of this article are “other than gold”. This implies that, if you join the IMF, your are not allowed to back up your currency with gold and your currency becomes, ipso facto, a derivative of the dollar. If you know Sheikh Imran Hosein, please listen to his lectures on ‘riba’, he even mentions in one of them his incomprehension of the Iranian Government for not abiding to the Islamic principles on money. Since Iran is an IMF member since 1945, this means that abolishing the Pahlavi regime did not mean abolishing all its ‘achievements’. The revolution was not capable of regaining full control and nationalize the Central Bank. You said “This is the only place I have ever seen the Iranian Central Bank described as “independent”. The “Monetary and Banking Act” published on the site of the CBI and referred to previously was for me the first place.
Now since you are resorting to mainstream ad hominem arguments against the facts that I am presenting, why not indulge a bit in the “Illuminati” delirium that is supposedly mine, just for the fun of Saker’s readers. In case the links below don’t work, please go to GoogleMaps and type in “Tehran Baharestan”, click on “the Parliament of Iran”, in the middle of the map, then click and enlarge the picture “Majlis of Iran” or Parliament of Iran that will appear on the right. You can then the admire a beautiful example of perfect Masonic architecture. There is not one atom of Iranian architectural influence in the design of that building. But the fun is not over yet. Close the picture view and switch to satellite view. Enlarge the aerial view of the Majlis of Iran. You will see like the 2 wings of a butterfly. Then count the openings on each side.
If you are based in Paris and wish to learn about the reality of Freemasonry in France, the Youtube channel of the Gilets Jaunes Constituants is very informative.
https://www.google.com/maps/place/The+Parliament+of+Iran/@35.6927337,51.4345567,3a,87.4y,90t/data=!3m8!1e2!3m6!1sAF1QipPG4YRwJb3qH0uvErPay1xcTtw_xbRu9kGQN9-1!2e10!3e12!6shttps:%2F%2Flh5.googleusercontent.com%2Fp%2FAF1QipPG4YRwJb3qH0uvErPay1xcTtw_xbRu9kGQN9-1%3Dw140-h86-k-no!7i1000!8i610!4m13!1m7!3m6!1s0x3f8e01889aeaf269:0x9286f4d05b478b97!2sBaharestan,+District+12,+Tehran,+Tehran+Province,+Iran!3b1!8m2!3d35.6924316!4d51.4283333!3m4!1s0x3f8e02213adc39c7:0xd42b8fee2bf5c27f!8m2!3d35.6920078!4d51.4344183
https://www.google.com/maps/place/The+Parliament+of+Iran/@35.6926618,51.4317538,652m/data=!3m1!1e3!
4m13!1m7!3m6!1s0x3f8e01889aeaf269:0x9286f4d05b478b97!2sBaharestan,+District+12,+Tehran,+Tehran+Province,+Iran!3b1!8m2!3d35.6924316!4d51.4283333!3m4!1s0x3f8e02213adc39c7:0xd42b8fee2bf5c27f!8m2!
3d35.6920078!4d51.4344183
LOL, thank you for proving my guess to be correct.
http://www.chapwoodindex.com/
Inflation/Deflation 101 – aka Understanding RipOffs
I’m a central bank. You give me $100 for my 5%, 20 year bond (simple interest just to keep it easy to follow). After 20 years I give you back your $100 and $100 more so you just made $100, right? Wrong.
Inflation at 5% a year means your $200 will buy what $100 would buy 20 years ago. You just gave me an interest free loan. I got to play with your money for 20 years then I give it back. That was fun. Let’s do it again!
Now comes the great part. I also have huge say in what counts as inflation so I artificially keep the numbers low (~ 2%) even though in reality it is over 5% (see link at top). The adjustments I make to pensions, and other payments the government makes, are only adjusted up by 2%. Because I keep the “official” rate of inflation at 2% I only have to pay 3% on my debt.
You are PAYING ME to play with your money! That is real fun now. But wait there’s more!! Why am I so afraid of “deflation”? If deflation happens the opposite occurs and I have to pay you back with money that is worth MORE to you in purchasing power than your original investment. Crazy talk man, crazy. Can’t have that happen now can I. Good thing I’m in control of the rigged game from all sides.
Sad note to end on. If we implemented Milton Friedman’s idea of limiting the growth of the money supply to the growth in the economy (long term about 2-3% a year). Never contract the money supply in a recession or you get a depression but the “real inflation” in that scenario is almost nil.