Few would deny that our own political system may also be put seriously at risk by inflation. Every politician, every party, has some cure to sell to the electorate. Everybody promises solutions, but none of them works because the inflationary forces are not national. The intricate, interlocking economies of the free world make isolation virtually impossible. So, as we see which is characteristic in post-modernism, the politician’s programs fail, and their promises boomerang, a fickle electorate turns to fringe parties or extravagant remedies, with the inevitable result of weakening the central government. Weak central government makes even moderate control of inflationary forces improbable.A best-case scenario is the exporting of inflation off-shore, and hoping the back bite will be less severe than expected, or muting the impact through Federal reserve bank policies such as bond buying and tinkering with the yield curve as in Operation Twist.
—“Ever since the Fed launched QE2 in August 2010, we have been in the currency-war regime,” said Alessio de Longis, portfolio manager of the Oppenheimer Currency Opportunities Fund. “It will continue to be this.”
In a late-2012 announcement, outgoing Bank of Japan leader Masaaki Shirakawa indicated an aggressive easing program that would total 50 trillion yen over the next year or so.—click image for source. painting Lucian Freud…
And so politicians and political institutions fall further into disrepute, and the rage of society grows. Political institutions , no matter how venerable, crumble with surprising ease. Old ideologies disappear with equal alacrity. New and harsh social moods can spread with astonishing speed. Inflation is viewed as the Black Death on political values.
If the resonances of he past ring clear and undistorted, what is certain is that once inflation leaps beyond control everything is in danger:
Jim Rickards, author of the New York Times bestseller, “Currency Wars, The Making of the Next Global Crisis,” does not believe the G-7 is not using the currency to boost their economic performances. “G7 statement on Currency Wars a farce [sic] since U.S. started it in 2010. … Low FX is backdoor to inflation when policy fails,” he said on Twitter, commenting on the fact that G-7 officials said they wanted to create domestic inflation and not weaken the currency.
“The problem is that the U.S. started printing [$85 billion per month].”
– John Paulson, hedge fund manager
The officials referred to a recent move of the Bank of Japan to print unlimited amounts of money in order to spur growth and create domestic inflation….Read More:http://www.theepochtimes.com/n2/business/g-7-plays-down-currency-war-risk-347291.html
—The team on the Guardian’s datablog has plotted how pay has fallen behind inflation in the UK, squeezing household budgets. They write:
Living standards have been falling consistently over the past twelve months, as inflation has run well above the rate of pay increases, which the latest labour market data showed averaging at less than 2%.—painting: ben Shahn. click image for source…
The everything in danger includes attitudes to life, our institutions, and, above all, our political systems. The strain is always heaviest at the center. The tempests are beginning to blow, triggered by the financial crisis, and they will rage for years to come…( to be continued)…
ADDENDUM:
(see link at end)…Federal Reserve Chairman Ben S. Bernanke defended the central bank’s unprecedented asset purchases, say
they are supporting the expansion with little risk of inflation or asset- price bubbles.“We do not see the potential costs of the increased risk- taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery,” Bernanke said yesterday in testimony to the Senate Banking Committee in Washington. “Inflation is currently subdued, and inflation expectations appear well anchored.”
Automatic federal budget cuts set to begin March 1 will put a “significant” burden on the economy if lawmakers can’t avert the reductions, Bernanke told lawmakers in the first day of his semiannual monetary policy report to Congress. He also urged lawmakers to put the budget on a “sustainable long-run path.”
Bernanke and his colleagues on the Federal Open Market Committee are debating whether to curtail $85 billion in monthly bond-buying amid concern the Fed’s record $3.1 trillion balance sheet may encourage excessive risk-taking by investors and complicate the Fed’s exit from easing. Read More:http://www.bloomberg.com/news/2013-02-27/libor-criticism-bernanke-on-currency-war-oxbow-compliance.html
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