Inflation is surging. We are in a messy situation now. But why? Because we spent much more than we can afford.
High oil prices and supply chain issues are just a small part of the overall picture. 2 years ago, world governments overreacted to a pandemic. They shut everything down except the printing presses. Central Banks all over the world printed brand new money like there is no tomorrow. The US printed $5 trillion on its own. So much money was printed that governments, people and businesses couldn’t spend it fast enough. Many are still sitting on huge stockpiles of cash.
This is inflationary enough on its own but it gets worse.
Governments all over the world are trying to buy votes. To get re-elected, politicians in charge create relief programs everywhere, left and right, up and down. While on one hand central banks now have to raise rates, as they totally underestimated the effect of printing money, they are now risking a serious recession, putting people out of their jobs and make it intentionally harder to live.
If these “not my money” politicians and their “free money” cronies get their way, this madness will make things even worse until the free market fully erodes and the system melts down. This is not healthy and the market is begging to clear itself or reset.
As unpopular it sounds but we need a recession. It needs to erase trillions of dollars’ worth of excess liquidity. It will be a painful experience. Sure. But the alternative is more of the same, more crises, more bailouts and an even bigger fall. I rather fall from a small ladder and survive than being pushed off the cliff.
But how big are the chances that these dopes come to their senses? Small and this is the worrying part!
Sven Franssen