I am thankful because after a year long stretch writing books, putting together seminars, and doing my taxes, for the first time in a long time I have the time to do an economics piece.
This will be short and nothing you don't already know, but the numbers are shocking when you put them together. And what we'll be looking at today is the numbers of dollars floating around in the economy, versus the GDP it presumably produces.
In short, I took the monetary base (the narrowest measure of money in circulation) and divided it by GDP. Ideally this ratio should remain flat as it is not the amount of money circulating in the economy that produces GDP, but the industriousness and entrepreneurial hunger of its citizens. Printing off money only leads to inflation, and truly (bar the inflationary or deflationary effects money supply shocks cause the economy) is irrelevant to the long term, fundamental productive capacity to this or any other economy.
However, politicians are stupid and they think that in making "Money Printer Go BRRRR" we can print ourselves out of economic/financial crises, when all we really do is spread the misery around to all Americans through higher inflation and a diluted currency. And so to measure this delusion I wanted to see how many dollars we are printing into circulation relative to the GDP we produce using those dollars. And the chart is nothing you wouldn't expect.
Starting in 1959 we used one dime to produce one dollar of GDP. This slowly decreased over time to a nickel in the 1970's where it stay until 2008.
Why 2008? Because this is when the financial crisis hit and then President George Bush Jr. (among government and Fed economists) decided it was a good idea to make Money Printer Go BRRR and double the money supply IN TWO QUARTERs. The monetary base jumped from $868 billion to $1.6 trillion just 180 days.
The money printer continued to go BRRRR under the in-coming Obama administration where Barry took the monetary base from $1.6 trillion to almost $4 trillion, more than quadrupling the money supply from it's 2008 base.
As the economy slowly recovered under the late and last term of the Obama administration, they pulled back on the money supply, lowering the monetary base to $3.6 trillion. President Trump continued this trend further lowering it to $3.3 trillion, the lowest it had been in nearly a decade.
But then a pretty serious cold hit the world, people lost their communal shit, we shut down the economies of the world, which once against prompted economists, governments, presidents and parliaments to do what they do best - make Money Printer Go BRRRRR again. And in that time President Trump added nearly 2 trillion to the monetary base, increasing the money supply by 56% in just one year.
When you tally up the numbers, we increased the money supply by almost 600%, but GDP only increased by 41% during that same time. And so what used to take a nickel to produce $1 in GDP, now takes a full quarter, implying a real inflation rate of 500%.
Now, of course, people will look and say, "I don't see 500% inflation!!!! Milk is still $2/gallon. Gas was just at a $1/gallon last year! And my video games are still only $55 for a new release."
Which is all true.
But the inflation goes where the financial system channels it, and the banking system lends money out to only some key areas, which have all seen prices go up by around 500%.
The stock market is up 400% from its 2008 lows. Housing about the same. Tuition is only up around 200-300% depending on which type of school you're going to. So are rents. Crypto-currencies and precious metals have certainly taking an interesting jump, haven't they? And I can't believe you idiots are actually paying $36,000 for the average price of a new car.
Yes, my fine, college-educated Millennial. You're right. The price of a pound of cheese is still 45 cents.
Oh...but what's that you say? You live at home because you can't afford the $2,500/month rent at the age of 33? Well, good thing we made money printer go BRRR and you got all that "free money" under Obama.
To regular readers, this observation is nothing new. We have an IQ above room temperature and in having said IQ we know printing off pieces of paper does not magically lead to increased economic production. It only dilutes the currency and lowers our purchasing power. But I am getting mighty sick and tired of the completely ignorant, idiotic, and uneducated Americans who cannot grasp this simple concept. The average college-educated 20 something who on one hand demands the government pay for everything and make sure nobody suffers any consequences of their stupid economic decisions by printing money, but then bitch and whine about the price of housing, rent, health care, tuition, transportation, etc, when that money finally settles where it was going to settle.
You people, and by that I mean the general American public, are fucking retards who deserve all the economic pain, malaise, debt, and stress that comes with it. And I find no greater joy than watching boomers take out reverse mortgages on their homes because they didn't save up for retirement, millennials panhandle for the taxpayer to bail them out of their sociology degree, and Gen X'ers constantly drawing equity from their artificially inflated home prices to buy trinkets to remain popular as if it were still middle school.
You will die impoverished, angry, and above all else confused because you didn't take the time to understand basic economics.
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