Nostr Web Client

Quote of the day:

> 90% of people have no savings, so they don't care what the debasement rate of the saved fiat that they don't have is. The other 10% of the people don't have their savings in fiat, so they also don't care. Everyone sees money as currency and they only compare the various fiat currencies with each other and governments just want to have one of the less-bad fiat currencies.

No lies detected.

(in German)

https://open.spotify.com/episode/1R8BlAVjbx3JkHKDIEIF7H?si=m6P0mwr6RT2HP876ZpRuwA

f0xr 1y ago

There are tens of trillions in bank deposits and cash in the US alone. "Someone" is holding every dollar at all times, so every dollar created is debasing someone's savings. Most just don't realize it.

But the worst debasement isn't savings, it's the lag in wages keeping up with prices. Every wage earner gets debased through that, and for a non-trivial amount.

Hyperinflation happens when wage earners finally catch on, and proactively demand wage increases higher and faster than price increases. That's what happened in Germany and Austria in the 1920s. The bougie "elites" were aghast at the wages demanded by their domestic servants, while their own "risk-free investment" in government bonds had evaporated to essentially zero.

That's the dreaded "wage-price spiral" the Fed has been freaking out about since 2021.

Reply to this note

Please Login to reply.

Discussion

Laeserin 1y ago

It isn't coming. We're in a recession and layoffs are ongoing. Labor has no economic power because we're being flooded with cheap Chinese goods.

f0xr 1y ago

It isn't coming right now. Gradually, then suddenly. Money supply has been shrinking for a while now, but that inevitably collapses the financial system because they're way too leveraged. And at that point it's if, not when, the next liquidity deluge hits.

That tighten>collapse>bailout>inflation cycle has been repeating at increasing size and tempo since 2000. Eventually a cycle becomes big enough that they can't stuff it back in the bag so to speak, and people just want to get out of the currency at all costs. That's when the wage-price spiral happens.

In the US we're being flooded with cheap Chinese goods and cheap Guatemalan labor. But that won't save them in the end, because the Chinese and Guatemalans will also demand higher wages to survive. The people actually doing the work always have the power at the end of the day. The elites are just terrified of the day the masses realize that fact.

In the US something like skilled construction labor costs went up by 20-40% since 2019 and they aren't coming back down. Living expenses haven't fallen, and tradesmen are continuing to raise their prices even as the building industry gets squeezed by lower demand. That's the earliest glimmer of labor shifting the pricing power back in their direction.