The Winter Of Discontent - Reloaded
I need only look at the issue of inflation to firmly believe we are about to see the worst winter (economically) in living memory for most of my readers, myself included. Yes I was alive in 1979's 'Winter of Discontent', but I wasn't old enough to be one of the many who suffered terribly through it. I will be alive this time though (touch wood, I think), and the indications suggest it could make 1979 look like a walk in the park.
After all, we had Thatcher to come along and fix it then didn't we? Love her or hate her, few can sensibly deny that she had a good grasp of basic economics and so there was always going to be a way out of that crisis when someone with a combination of courage and fiscal common sense took the reigns and did what any responsible household would do, let alone government, in a time of financial hardship: Reduce the damn spending!
I see no way out of the misery to come this time round for most people. Of course the Liberal Elites and billionaires will do fine on their 'prepper islands' and lavish 'SHTF bunkers'. Not so for the average Joe. (I said ‘average’, Sleepy aka ‘The Big Guy’ will be just fine I assure you!)
Supply line issues, empty shelves, fuel price hikes, bankruptcies, heating oil/gas prices rocketing, increased crime...
When I said a few years ago this was coming, virtually everyone I know either scoffed at my 'cynicism' or 'doom and gloom outlook', or they outright laughed at me. Being in the Marxist enclave known as the United Kingdom, I am surrounded by people who think the magic Nanny State can always fix everything without it costing anyone a penny. It baffles me the amount of brains we have in this little island, yet common sense is almost completely extinct at this point.
I of course desperately wished I was wrong in my ‘doom and gloom’ outlook, but I knew I wasn't. It's very simple, it's binary. There is just no escape from inevitability.
Inflation
Throw up a stone, down comes the stone. The only variation is in how long it takes for it to come back down, depending on how hard upwards you throw it. That is where we are now with inflation and the endless printing and spending of 'new money', waiting to flinch, and they have thrown a LOT of stones up in the air. It's time to get your PPE on, no not your surgical mask, your hardhat, dummy!
Who among us does not know only too well that, if you spend more than you earn, you get into trouble. If you then keep spending more to try and buy your way out of it, well we all know where that leads, especially those who have ever got a little too attached to gambling!
It's called The Sunk Cost Fallacy, and its why people can often feel tempted to 'throw good money after bad'.
As a good friend of mine often says:
"The first rule of holes:
When you're in one, stop digging!"
So what makes many people think it's somehow magically different when it's the government holding the purse strings? Have these people never heard of "Zee Budget"? Yes, government has balance sheets too, bills to pay, staff to pay, income to earn (via taxation) etc. Just because they have the power and authority to print money, do people really believe this somehow enables them to defy the laws of physics, economics, logic, and universally-accepted standards of morality?
Ever since they started printing money to 'kick the can down the road' many years pre-Covid, they were storing up this little mess for us all. They of course didn't call it "printing money", and never do. Instead they adorned it with the lovingly mystifying phrase: Quantitative Easing, like that's going to be discussed by pub-goers in any depth! Nice trick, swines.
But who wants to listen to naysayers like me? (And many actual economists for that matter.) Much easier to just avoid thinking about it, take the cash whenever and wherever you can, and just get through to Saturday when you can catch up on 'news' from the mass media, and retreat into oblivion with some alcohol and soft porn trash TV while your kids are probably doing the same upstairs, if they aren't 'gaming' their own little way into mindless oblivion. (Play Scrabble FFS!)
Printing money is not the solution, it is the problem. It's the one thing that will destroy our lives, and those of our children and grand-children.
Every Pound they print devalues the pound in your pocket. So up goes your Sky bill, up go your milk and eggs, up goes your beer, your diesel, your clothes.... and since every company you buy from also consists of humans living in the same system (with the same needs as you), up go your hair cuts, your landscape gardener's fees, your car mechanic's rates, your vet bills, your gym membership, your pet food, the car wash and your Mozarella Panini/Flat White brunch ..... need I continue?
When they turn on the printing presses like this, it ALL has to go up just for everyone to stay where they are, nobody gets richer by these price hikes, because the goods and services are NOT actually becoming more 'expensive' in real terms, you just have to hand over more of these increasingly worthless pieces of paper you call £Pounds to get the same thing you could buy yesterday for less of 'em!
I am constantly gobsmacked by how complex the 'news analysts' and politicians make the subject of inflation sound. It's as if they want people to switch off when they hear it!
They blind people with boredom, and if that doesn't work, with pseudo-scientific explanations of complex economic equations and so on. They need it to be deemed too complicated to understand for the average voter, otherwise people would make a gut-based decision on it just as they do on other issues, and this would severely harm the mandate of any government who behaved so irresponsibly.
However it is actually no more complex than the rule of 'Supply and Demand'.
There is a fixed amount of 'stuff' for sale in any country's economy, stuff being goods and services. There should be a relatively fixed amount of money in circulation to buy those goods and services. If you were to double the amount of money in circulation, meanwhile the amount of goods and services stays the same, of course the price of goods will change.
What if you doubled the money in circulation, but also halved the quantity of goods available to buy? Think how fast prices would sky-rocket. Then consider how we are actually seeing this effect right now with the 'supply-line issues', low stocks of all sorts of things, far too many for me to list. Have you tried buying timber lately? Steel? Concrete? If you can get what you need, compare the prices to a year ago, then to 2 years ago. It's truly shocking, and we aren't even getting warmed up yet.
(Pop Quiz: During the recent UK 'fuel crisis', there was a 'perceived shortage' of fuel. Did anyone see prices go down? I doubt it! But I bet just about all of you saw prices go up. Some of the motorway services were charging obscenely inflated prices. Why? Because they could, because people would pay those prices in their panic (ultra high demand). There was less supply, and more demand. Best of all, you got a first hand look at how closely those two things are related. Supply goes down, demand goes up, so supply goes down more, so demand goes up more... Most importantly, you may have noticed that it didn't take months or years for this effect to manifest itself, it took just HOURS for the busiest forecourts to respond to the situation and hike their prices. Remember that won't you, when you're wondering how fast things could go 'pop' in the UK. And think again what those billionaire preppers might know that we don't.)
Meanwhile they print more money as more and more stuff goes out of circulation or at least reduces in availability. It's a very ugly, very dangerous, snowball. And the heavier it gets, the more weight they add to it. The faster it rolls, the harder they push it. Our children and grand children are at the bottom of the hill playing innocently in the snow, with their backs turned to the impending doom hurtling towards them.
If they were to turn around, many of them would see their own parents giving it a little nudge too. I hope those parents stick around long enough to be thanked by their children, in that special way only our children know how to do!
Inflation is here, in a big way. And because they are continuing to make the same mistakes, I think we could well be facing hyper-inflation before long, which is a smidgen worse of course.
Surely you have seen the pictures from Germany before WW2 when money became so worthless (due to hyper-inflation) that people burned it to keep warm and they needed a wheel barrow to carry enough of it to buy a loaf of bread.
It is far too easy to consign this to 'history', especially when the photos are black and white, hardly seems real does it?! But it WAS REAL, those were real people, real lives, real starvation, real disease, real death.
"Germany was hit by one of the worst cases of hyperinflation in history with, at one point, 4.2 trillion German marks being worth just one American dollar.
It began during the First World War, when the German government printed unbacked currency and borrowed money to finance its dream of conquering Europe."
If pre-war Germany is too long ago for you, have a read up on Argentina's hyper-inflation induced economic collapse after a "run on the banks" occurred in November of 2001.
It's a truly shocking story when you listen to real people who lived through it. But what's perhaps even more shocking is how so many people find it hard to believe it could happen here, let alone might.
That's precisely what the Argentinians thought pre 2001, and if you're not aware, most households had 2+ vehicles on the drive and 2+ holidays per year, it was a hugely prosperous country, until it very suddenly, er, wasn't.
"Hyperinflation survivor Fernando "FerFAL" Aguirre shares his observations of life during and after Argentina's currency collapse in 2001. He notes that the decline initally began slowly, with most of the populace slow to wake to the danger. But when the eventual collapse occured, it happened practically overnight – catching the country by surprise. In the wake of the collapse, dealing with poverty and violent crime became the dominant themes."
I have heard everyone from my neighbours to my relatives grumbling about price increases in recent months, be it broadband subscriptions, food, diesel, steel, plywood, concrete, vitamin tablets, wine, medicines...
I firmly believe it's going to get worse fast, and it doesn't take long to find evidence to support that view:
Each time I hear the complaints, I try to explain to them that they are probably not increasing their real world 'price' at all. They are simply forced to raise the number of pounds and pence we give them in order for them to get the same 'payment' (in real value terms) for their services as they were getting previously, with which they have staff to pay, more goods to buy in, etc. They are not getting any more value from the bill payment, they are just getting more pounds and pence, because those are worth less now.
And there's a long way to go (down) yet since nobody will talk about this with the seriousness it deserves in mainstream outlets, as so many fools are enjoying this short term orgy of irresponsibility and reckless selfishness. Mostly those power-crazed self-absorbed over-entitled sycophants in Westminster.
It's like a dirty little deal:
Government continues doing what we all know is wrong and ultimately fatal for the country long-term, and the average voter gets to buy more take-aways, flat screen TVs and iphones (without having to earn the money) so they'll just enjoy it and keep quiet about it, those who understand it, that is. And for those of you who think people don't understand it and therefore can't be blamed, how many adults have never heard the old addage "You don't get owt for nowt?" or some similar phrase making the same point?
Exactly. All these apparent idiots would certainly know there was 'something wrong' if some guy in a bar offered them a Ferrari F40 for £500, everyone older than about 12 knows the old addage "If it seems too good to be true, it probably is" so I don't buy the ignorance/stupidity defence at all.
As just one brief example from my own personal experience, I have (I should say 'had') a friend who's a self-employed builder. I hired him once quite a few years back to build an extension for me, then had him back for various other jobs and got to know him pretty well. He isn't very well-off and really appreciates any work he can get so I always kept him in mind for that type of work.
Back when the first 'furlough' payments started flowing (before I had ever heard the word or even knew about the scheme), I rang him to ask if he could give me a hand building a large cabin/shed. I thought he would appreciate the call as I assumed there wouldn't be much work (early Covid days) with everyone panicking that someone might give them the deadly lurgy, people wiping car seats with useless wet wipes, covering their oxygen-intakes with a cloth sieve, and lobotomised snooker players 'bumping elbows' after several hours of sharing a table upon which they placed their clammy hands before every single shot! WTF?
Here's how the chat went:
Me: "Hi Jeff, how's things?"
Jeff: "Wotcha mate, not bad thanks, what's up?"
Me: "I just wondered if you fancy some work to give me a hand building that shed we talked about? Shouldn't take more than a long weekend so how's about 500 nicker in your back pocket if I throw in a few beers, a pizza or two, and some bloody good conversation?!!"
Jeff: "Ha, thanks mate but no thanks!"
Me: "Oh, really? Have you gone and won the lottery or something?!"
Jeff: "Ha ha, yes well kind of."
Me: "Shit, seriously?"
Jeff: "Well no, but I'll tell you what my life is like right now. I am currently sat on a deck chair in the garden enjoying this beautiful hot sun on my bare body while I listen to the birds I haven't heard for years as I never get the time to sit in the garden. Sheila just brought me another pack of Strongbow, I have one in my hand and one sitting on ice in a bucket next to me. I am loving every minute of Covid so far! Best bit: I'm getting paid £250 a day to sit here like this tanning myself so why woud I want to lift heavy wood and go and up down a ladder in this heat? No offence!"
Me: "Crikey, how does that work?" (I didn't know about ‘furlough’ then)
Jeff: "Mate you've gotta start watching the news! It's called Furlough! It's fu**ing fantastic! The government pays everyone who can't work due to Covid. So I'm not doing any more building work for the foreseeable! I will let you know if I can help some time but while they are paying me to sit in the garden I'd be stupid to do anything else wouldn't I!"
Me: "Ok, well I'd better leave you in peace then, take care mate, bye."
What I should and would have said if it weren't for my bloody annoying British stiff upper lip, is:
"Well don't let me interrupt your paradise any further! I had better go warn my kids they will have to work extra hard for the next 50 years to pay for all this bliss you're having! I hope you find plenty of work again when that ole nanny state's tit runs dry! Don't bother calling me will you."
Of course I didn't say that, damn coward that I am. But I sure as hell won't be giving the bum another penny. Of course you can argue that people will do what people will do, offer them money for nothing and many, maybe most, will take it. And you'd probably be correct, but does that make it right?
Yes the primary blame lands at the feet of government, speaking of bums.... ! But when people see what the cost of this will be (mainly for their children), I'd like to say they may regret it. But then in reality I doubt they will realise their hand in the dismal future they helped paint for us all, I don't think the X Factor presenters will inspire critical thinking to quite that level, nor much of the mass media for that matter.
No. We will all of course just carry on playing our role as paying spectators to the wonderfully traditional Punch and Judy show they call Parliament, that theatre that makes us all feel so good about our so-called "democracy", helps maintain the illusion that we the People have self-determination and 'choose' our rulers, and helps us to keep playing along even when it seems futile and nothing seems to improve for most people, like the casino owner plying you with drinks to come back to the poker table after each bad beat...
"Come baaaack, you know you want to, you're luck could change any minute!
I'll get you a drink on the house while you find another table..."
I hope that didn't suggest any personal experience I may have of casinos! Moi? ;)
Of course, ever reliable, we will just continue voting out one set of political lowlifes, blaming it all on them when the media tell us to, only to install the other team's equally low forms of humanity who will go to great lengths to fix absolutely nothing from the previous administration, and instead just set about adding a whole new raft of problems (for us, not themselves, of course) to keep us divided and thus predictable in voting for the other team once the blue/red team's turn is over.
Meanwhile Punch and Judy wine and dine each other when the cameras are off, attend the same sordid societies, play at the same golf clubs, maybe fly on the same Epstein 'pleasure plane' etcetera, before returning back to the spotlight in suitable costume ready for the next staged bout of 'argument' or so-called disagreement. 'Twas ever thus'
Yes of course there are some rare exceptions who want to bring positive change to all that, but that's precisely why you hardly ever see or hear from them, and it's also why there is a well-organised filtering system in place to ensure that only the 'chosen ones' get to any position of real power and influence, and not these rare 'real people' who might upset the apple cart and do something shameful like act like a servant of the people instead of like a neglectful or abusive parent.
It is my firm belief that Parliament ultimately serves one purpose and one purpose only, preserving the status-quo. Their status-quo, of course. And for a long time it has been the status-quo to print and spend our way out of trouble, and into more debt.
Who cares if prices rise for people on the street? The people who print the money don't live there! Ok they drive and eat and do everything else we do, and I am sure it isn't 'nice' to have to spend an extra tenner filling your Range Rover Vogue before you can collect Charlton and Josephine from dance practice, but really, it's not quite the same as people being in the position a relative of mine is in right this very minute, forced to choose between keeping her Sky TV subscription, or getting a new pair of glasses from Specsavers so she can actually see what she is watching. I suppose she could always just move closer to the TV. Hmm.
Venezuela had a huge inflation problem in 2016 where the inflation rate hit 800%. Their currency, the Bolivar, had been strong when they had oil exports and things were going well. But then Hugo Chavez ran a whole series of well-meaning 'social programs' intended to help the poorest people in the country. Sadly, as so often happens, all that does is feed the hungry for a while until the whole country goes bust, at which point many more people starve and there's very few ways to raise taxes to fund more social programs because, well because everyone's broke and now that includes the wealthy ones who pay most of the tax to fund such costly programs.
So what do they do then? You guessed it, print yet more money and dish it out to all those poor (soon to be poorer!) people. And as this summary of the Venezualan crisis explains:
"In these conditions, printing more money simply made the problem worse. It added to the supply of currency, pushing the value down even further. As prices rose, the government printed more money to pay its bills. This cycle is what causes hyperinflation"
For anyone interested in the subject of inflation, nobody explains it better than the economist, Milton Friedman, who received the Nobel Prize for Economics in 1976:
And after watching that short but sweet clip, read this utter nonsense from Rishi Sunak peddling that exact same BS that Milton Friedman just told us is exactly that, BS!
Is it possible that we will scrape through this winter without the near complete collapse of the economy that I fear could happen? Yes it is, but only if they do one thing...
Hey you're on a roll! You guessed right again! PRINT EVEN MORE MONEY!
At some point this farce must collapse, but printing more and more money will simply stave it off for a bit longer, although that makes the end result exponentially worse with each ‘kick’ of the can (each print run).
This winter I do think it may just be impossible to do much more kicking, the can is so beaten up it hardly even rolls down the street any more, and fewer people are buying the smokescreens they throw up to disguise the reality of what they're doing. Just a look at fuel price increases is enough to wonder if printing money has any ability to postpone the inevitable any more.
And that "£99 maximum fill" rule that all the supermarkets have at the pumps, well that's going to have to adjust isn't it! I can't fill my car in one trip to the garage any more! And I hate not filling to the brim, especially after the recent fuel crisis, which is yet another indicator that we are on the razor edge of very bleak (and likely dangerous) times.
I saw people physically fighting at the pumps during that! As I watched in amazement, all I could think was "Argentina 2001"! Thankfully it didn't come to that and I didn't seriously expect it to as I knew the crisis would be short-lived, but I also saw first-hand what the future would look like if it hadn't been short-lived.
And one day soon, it may not be.
Well that just about concludes this brief rant, but before I sign off, I want to make one final point about inflation. Just in case there is anyone reading who thinks printing money is ‘ok’, not problematic at all, as I have heard some lunatics on the media saying it's even an "economic benefit" recently! I just have one question for you:
If it's totally harmless (never mind a good thing), then WHY NOT PRINT BILLIONS and just hand it out to everyone?
Nobody would need to work, we could all just get a handout of cash. Seriously, why not do that if printing fresh cash is harmless or even a good thing?
As any first-grade economics student will tell you, doing that would destroy the country in no time at all. It's self-explanatory when you think on it a little, for example where would you buy your milk and bread?
What did you say? Tesco?! Ha, there is no such thing as Tesco any more, me 'ole mucker! They couldn't get staff because nobody needed to work, remember?! Need a dentist for that broken tooth do you? Good luck with that!!
When it comes to economics, there is one thing I am completely certain of:
Common sense really needs to be a whole lot more ‘common’!