Over the past 13 years, a huge number of economists have been wondering what to do with all this hanging cornice of printed dollars after 2008, and even with an unlimitedly growing national debt?
Everyone knew that at some point the printed dollars would still get out of the financial market into the real one and begin to create huge inflationary pressure. It’s just that no one knew when it would happen. And it looks like it’s happening now.
History repeats itself – in the late 1970s, the United States was already going through this stage. There was a communist competitor at its peak, inflation was accelerated due to rising energy prices, the country was losing the technological/production race (to Japan and Germany), and the movement of blacks for the next expansion of their rights and freedoms was extremely strong.
Then the American “victory” happened as a multi-stage plan for victories on various fronts.
In general, the fight against the inflationary crisis of the world’s largest economy is fundamentally different from the fight against a recession. And it consists of a number of key points, the main purpose of which is to increase productivity so that the same people work the same amount and produce more, which ultimately should bring down the inflationary momentum.
So here are the points:
- Reduce the cost of resources, primarily energy. Cheaper resources make it possible to reduce the cost of production. In the 80s, this was done by raising the Fed’s rate sharply and thereby bankrupting a bunch of commodity economies (they could not pay their debts in dollars), after which their resources were pumped out for next to nothing.
- It was decided to strangle technological competitors and pull their brains over Plaza Accord and the creation of a financial bubble in Japan, which subsequently dragged the country into a protracted recession.
- Find ultra-cheap labor somewhere with access to warm seaports to reduce shipping costs. Just at that time, the pumping of China began.
Then, as a bonus, they overwhelmed the USSR and sawed its decaying body for another 10-15 years.
In general, a series of extremely successful “special operations” pulled the US economy out of deep stagflation. And then they also muddied the petrodollar, which helped to keep a stable demand for that very “dirty green paper”.
Now history is repeating itself. The strongest has begun again stagflation. All the same problems, only now there is also a huge public debt. And so far, to be honest, I do not see any steps towards repeating past successes.
Right now, the only thing on the official agenda is organizing a “controlled recession.” That is, slowing down inflation by collapsing credit bubbles and reducing the purchasing power of the population.
It all sounds literally like the treatment of migraine by cutting off the head. Perhaps now we are really witnessing the very fall of the empire that happened earlier with Britain and Holland.
Well, maybe there is something that I do not see, and the Americans are working on these points. Share in the comments if you have any tips.