No Inflation Friday: 42.4% Increase In The Price Of Being … Poor?

Inflation-Ahead

No inflation Friday: 42.4% increase in the price of being… poor? (Sovereign Man, May 23, 2014):

One of the most intellectually disingenuous statements made by western policymakers is that inflation is tame… nonexistent.

For example, the minutes released this week from the most recent Federal Reserve policy meeting said that the Fed saw NO inflation risk in ‘fueling job growth’ [i.e. printing money].

So by their own admission, the Fed thinks they can conjure hundreds of billions of dollars out of thin air without any consequences whatsoever. Zero risk.

Every time I hear something like this it just makes my skin crawl… and I always think, “go get on a plane.”

Inflation is out there in the rest of the world. To deny its existence is massively arrogant, insensitive, and just plain wrong.

Foreign central banks, particularly in developing countries, are desperately trying to expand their money supplies as rapidly as the Fed is expanding the supply of dollars.

They’re failing.

While the Fed expanded total credit by more than 20% last year, places like Indonesia are straining the system to expand at half that rate.

Yet inflation in Indonesia (officially) is north of 7%, and on the street much higher.

The US can get away with printing lots of money. At least for now.

The rest of the world is induced to mop up US dollars; foreigners buy US bonds and hold US dollars as reserves overseas.

And since so many dollars are held outside of the US, there’s fewer of these freshly created dollars circulating within the US economy to push up the prices of goods and services.

But foreign countries can’t do that.

Nobody holds Indonesian rupiah as a major reserve currency, nor buying Indonesian government bonds as a cash equivalent.

As such, when Indonesia prints money, a lot of that money stays in the local economy. This means there’s more money chasing the same amount of goods and services.

This creates price inflation.

And the only reason they’re printing so much money to begin with is because the US, Europe, and China are all doing it.

They call this ‘competitive devaluation’. If everyone else is reducing the value of their currencies, and you don’t, then suddenly your export commodities will be too expensive to sell abroad.

This is the death knell for emerging markets who generate growth through exports. And so, they print. They inflate.

Perhaps the most striking example is the World Bank, which is now considering a massive revision to how they define ‘poverty’.

The global poverty line used to be defined as living on $1/day or less. Then they had to increase that to $1.25 in 2008, since, even for the world’s most impoverished, one dollar wasn’t such a big sum anymore.

Now the World Bank is looking at increasing that poverty line even further, to $1.78. That’s a 42.4% increase.

All of this is because new economic data from Centre for Global Development and the Brookings Institution showed that the number of people living on less than $1.25 has halved.

It’s not because there are that many fewer poor people in the world. It’s that you can’t even be poor anymore on $1.25/day.

Thanks to all the money printing that has taken place around the world, it takes a much greater sum these days… just to be impoverished.

Not that there’s any inflation.

4 thoughts on “No Inflation Friday: 42.4% Increase In The Price Of Being … Poor?

  1. This is in direct opposition to the truth, and to the propaganda put out yesterday, that tapering was good, as were higher interest rates.
    These bastards lie so much, they cannot keep their stories straight.
    The statement made by Russia and China regarding the de-dollarization plan, already embraced by half the world economy has left the US with little choice but to cut printing and raise interest rates. Money, real money, is in short supply because none of the paper stuff is worth anything.
    They are out of their depth. They don’t know what to do……they are screwed, especially the idiots running the US.

  2. More on why the world is sick of US destabilization…….Putin speaks reasonably, with calm and coolness…..the US looks more flaky all the time.
    Its pathetic. Putin is just as dreadful as the rest of the world leaders, but he sure plays his cards a lot more mindfully and carefully……
    I wish we had such intelligent leadership. Without calling names, he makes it clear the US puppet government is causing the problems in the Ukraine. Anyone who knows about Russian history understands most Ukrainians see themselves as Russian, not US puppets.
    Here is the article. This is why the de-dollarization is going to win…..credibility. The US has none left. The clown we have in power right now is a joke……
    http://america.aljazeera.com/articles/2014/5/23/putin-ukraine-economic.html

  3. It’s also becoming increasingly clear that Mark Carney doesn’t believe any of Chancellor George Osborne’s bollocks. Barely a day passes now without the central banker either threatening to cap mortgages, announcing further stress tests, or putting off rate rises because of what he thinks is “spare economic capacity”. Carney also knows, of course, that a run to raise interest would destroy Britain’s banking system. The silence of the UK’s Right Wing press on the now wide-open split between Mark Carney and George Osborne is deafening.

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