by Charles Hugh Smith
Of Two Minds
Political resistance to the oligarchy’s financialization skimming operations will eventually cripple central bank giveaways to the financial sector and corporate oligarchs.
That inflation and interest rates will remain near-zero for a generation is accepted as “obvious” by virtually the entire mainstream media. The reasons for this are equally “obvious”: central banks have the power to suppress interest rates indefinitely by creating money out of thin air and using this new cash to buy bonds in unlimited quantities; and the commoditization/ globalization of labor, capital and production has generated a global backdrop of over-capacity and near-zero pricing power.
But suppose for a moment that this confidence in near-zero interest rates and inflation as far as the eye can see is wrong. As I have demonstrated this week, rising interest rates and inflation would break the back of the status quo.
What makes inflation difficult to grasp is its multi-faceted character. Inflation is a monetary dynamic, to be sure, as creating new fiat currency in excess of increasing production / productivity reduces the purchasing power of the currency.