When I was younger, I used to be able to dunk a basketball.
Jerome Powell just admitted that he was baffled that inflation has not come down. According to the Labor Department, wholesale prices increased by .5% from March 2024 to April 2024.
According to all the “experts,” who for some reason have all drunk from the same bucket of hallucinogenic Kool Aid, the purpose of raising interest rates is to make borrowing more expensive, which is designed to slow consumer spending and business investment, lowering demand and thereby bringing prices down. They use the pejorative “overheated” to describe the economy. To them a strong economy is bad. Up is down and down is up. Legends in their own minds, only they are worthy to navigate the turbulent waters of American capitalism. Thus, all of academia, the group think media and our betters in Washington think that by making our lives miserable as well as everybody much poorer, they are actually helping us. Pass the bong. Could it be that they have it exactly backwards? Has this holy triumvirate ever been right about anything?
Let’s see if making people poorer reduces prices a la reductio ad absurdum. Let’s use some deductive reasoning. I find that if one reduces a concept to a simpler form to prove a hypothesis, then one can extrapolate that truism over a broader spectrum to prove a larger point.
Let’s say there are two towns, Warsaw and Montross. They are in Virginia about 12 miles apart. Both are 1,000 acres in size and have 1,000 residents. Both have no contact with the outside world, but they both trade with one another. There is no central currency. They either barter or come up with a means of exchange that they both accept, such as using pretty rocks. Neither town can produce as much as a pencil. Let’s say Montross has some sheep and Warsaw has a forest. It’s possible for Montross to produce a wool shirt and Warsaw to produce a roughhewn 2 x 4. It takes 160 hours to produce the shirt, plus the costs of the wool, which can only be measured in the time and labor of doing other work to produce the pretty rocks to pay for the wool. The 2 x 4 takes 80 hours to produce, but the price of the lumber is way more expensive than the wool. It took 100 hours of labor to trade (using pretty rocks) for the purchase of the lumber before it was milled into a 2 x 4.
Both towns are miserably poor because both towns have no access to other markets or excess capital to expand their markets.
Money is just a medium of exchange. When people buy things, they are exchanging their costs and labor for the thing they want, and pretty rocks are the method of exchange. If Warsaw and Montross were part of the world economy, Fred in Warsaw could buy the shirt for ½ an hour of his time and it would be a much higher quality shirt. Frank in Montross could do the same. Thus, access to markets and capital drives prices down. Why does this principle not apply over a broader spectrum?
By making capital more costly doesn’t this restrict capital and shrink one’s ability to engage with a broader markets of goods, services and labor? Won’t such restrictions cause more labor and costs to be utilized to produce and then buy the wool shirt? How does making everybody poorer and limiting their opportunities to reach broader markets make prices go down?
Look, I’m just an ordinary bloke who used to be able to dunk a basketball, what do I know about economics? Well, I know that you can’t slap a penis on a boy and make him a girl. I knew that Tony Fauci is a two-faced ignoramus, and that the vaccine would only cause the coronavirus to mutate and that it wouldn’t work. I know that C02 is a miracle molecule, much needed for a green planet and that climate change is a hoax. It seems I know a lot of things that our celebrity expert class doesn’t know. I know that men can’t have babies and that letting people steal whatever they want from CVS is not good social policy. So why should anybody swallow hook, line and sinker anything they say, especially a big stud like me who used to able to dunk a basketball?
Prices rise and fall for a multitude of reasons. Not every rise in prices is a result of “inflation” which is a devaluation of the currency, making the pretty rocks smaller. Let’s not forget that our expert class shut the world economy down, destroying millions of businesses, livelihoods, supply chains, credit agreements, etc. In essence, they told Fred in Montross he couldn’t sheer his sheep, manufacture his shirts or have access to a broader market. Thus, Fred had to put much more of his time and costs into making that shirt than he did before the idiots shut the world down.
I’m sorry to disagree with all the experts that have brought us a $34 trillion dollar national debt and think cow farts are going to make the world explode, but it seems to me that all the progress the world has ever known was a result of being wealthy and not poor.
Making people richer brings costs down. More capital (not less) makes for more investment, more innovation, better access to labor and goods and services. A vibrant economy innovates, makes goods and services more plentiful, cheaper and of better quality.
It was 40 years ago when I could dunk a basketball. I can’t dunk anymore. Our pointy-head class in Washington looks back 40 years and thinks it can still dunk. They think Paul Volker beat “higher prices” by raising rates, but maybe Paul couldn’t dunk, maybe prices came down because of an emerging competitive and growing economy, strong dollar, reduced taxes and capital suddenly flowing to productive sources? Maybe, lower prices are a natural, organic process that always occurs when the Freds and Franks are left alone and have the tools to compete in a thriving “over heated” economy. Maybe sudden artificial mandates, like raising interest rates 300%, causes businesses to have to make radical adjustments that zap the enterprise of its energy, creating inefficiencies and ultimately higher costs. Nothing makes sense about the Fed purposefully slowing the economy down to lower prices.
How many times do our political and economic wizards turn the ball over? They can’t dunk, they can’t even dribble. They don’t even know what locker room they are in.
