The Top 3 Reasons The US Has Entered The Inflation Death Spiral

The comments below are an edited and abridged synopsis of an article by Nick Giambruno

Rapidly rising food, housing, medical and tuition prices are squeezing North Americans, and many do not understand the real cause of their falling living standards. That confusion opens the door for opportunistic politicians who promise supposed freebies to ease the pain of inflation.

The Top 3 Reasons The US Has Entered The Inflation Death Spiral - BullionBuzz - Nick's Top Six
death spiral metal text on business background 3d rendering

The policies offered to people suffering from inflation create even more inflation. In other words, inflation has a way of perpetuating itself, much like a heroin addiction.

The political inflation cycle follows a clear pattern:

1. In a fiat currency system, the government will inevitably print an ever-increasing amount of currency to finance itself.

2. This makes prices and living costs rise faster than wages.

3. The average person feels the pain but doesn’t understand what’s happening.

4. More people support politicians who promise freebies to relieve the pain inflation causes.

5. The government prints more currency to pay for the freebies.

6. This creates even more inflation, and the cycle repeats.

Giambruno explains each of the steps and discusses what happens next. He believes the US has entered an inflationary death spiral for three reasons:

1. A growing majority of voters who collect net benefits from the government is a built-in constituency to perpetuate policies financed by ever-increasing inflation.

2. Even if we presume the Fed has benign intentions—which it doesn’t—central planning is impossible, and failure is inevitable.

3. The US government cannot finance itself without the Fed’s printing presses. It is also incentivized to debase the currency as it attempts to deal with its impossible debt burden.

In short, it’s game over.

Leave a Reply

Your email address will not be published. Required fields are marked *