How Inflation is Good for Government and Special Interests

Reasonings favoring inflation are directly tied to the debt reaching unprecedented levels during the COVID overreactions, especially the useless shutdowns. We are not intending to comment on the necessity or what might have been a more crafted response to the imposed economic shuttering raising debts beyond any previous levels. This debt is mediated by devaluing the dollar, specifically against other world currency. Just for argument’s sake, let us presume by January 2025 the dollar will be worth two-thirds the January 2020 dollar, basically the value the dollar promised when these loans were incurred, including the current spending. All foreign holders of United Stated debt or those paid in American dollars, be they in retirement or receiving paycheck such as for the military and State Department; these entities will all have lost one-third in holdings or in salary through no fault of their own. But there are reasons for optimism, reasons directly tied to trade balances.

COVID Debt

Another aspect of inflation, beyond reducing the real-world debt owed by the United States, is it makes foreign imports more expensive while reducing the actual price of exports. This would appear to be one enormous incentive to become energy independent once again; otherwise, fuel prices from electricity to the petroleum for your vehicle will skyrocket potentially to over $10.00/gal at the pump. Inadvertently, as it is obvious, it is their intent to kill all use of fossil fuel. After another year of inflation easily exceeding ten-percent, the United States labor market, the workforce, will become competitive and potentially become even more competitive over time. These gains will not be evenly distributed should current regulatory policies be achieved. The fossil fuel industries are being targeted with an obvious intent to drive them from providing fuel for automobiles while giving monetary incentives for the purchase of an electric vehicle. In conclusion, massive deficit spending leads directly to high inflation thus reducing the actual cost of government debt while reducing the actual purchasing power of her citizens. And yes, it does hit minimum wage earners, the elderly, the disabled (not even able-bodied), those on pensions and those living on fixed incomes the worst, especially those residing outside the United States (yes, that includes me).

Beyond the Cusp