Division, friction and polarization have been increasing in the West for at least a decade, but the escalation seen in the ‘year of covid’ was particularly worrying. With inflationary pressures and actual war added to the mix of political and social tensions in the last year, this “worry” has become a real pressing concern, some might argue, a real emergency. .
Looking into 2023, there are many reasons for responsible investors and hard-working savers to adopt a cautious, bearish outlook. If anything, it’s hard to tell what to worry most about and what to prepare for first: escalation to war between Ukraine and Russia? Is inflation continuing or peaking? Will fuel and utility costs explode further? Increasing government overreach and repression of individual liberties and economic sovereignty?
To answer questions like these that keep countless Americans and Europeans up at night, I consulted Jeff Deist, director of the Mises Institute in Alabama. Jeff is one of the most impressive thinkers and speakers I have personally met, and his clarity of thought is both particularly enlightening and very useful in this day and age. I always feel that After all, the ability to communicate a great idea openly and honestly is just as important as the ability to conceive it. Especially when it can be communicated to the public and change open minds in the process, as the Mises Institute does. 40 years.
Claudio Glas (CG): Many citizens hope 2022 will be the year of ‘normalization’ after extreme trespassing, abuse of power, irrational policies and diversions seen during pandemic I was there. What we got instead was war, fuel and food crises, and a world more divided than ever in recent memory. what was the deployment?
Jeff Deist (JD): 2022 may be remembered as the year we fully understood that the elite and political class will never allow a return to “normal.” The H1N1 virus has created excuses for lockdowns, controls and espionage. As Robert Higgs explained, the “ratchet effect” means that crisis measures do not disappear when the crisis is over.
Covid imposes a whole new set of state mandates in the areas of health (vaccines, masks, testing), business (closures), money (central bank digital currencies, capital controls), and movement (quarantine, travel) It will be a pretext for attempts to limit). It is up to us to restore normalcy and decency. Politicians always go in the opposite direction.
CG: We have long warned that the monetary and fiscal policies that the Federal Reserve and most of its peers have been doing for over a decade will come at a very high price. Why do you think it took so long for inflation to pick up?‘Are you still in pain today? What started it and why now?
JD: The current inflation that is engulfing the US and other Western countries is more due to fiscal stimulus in 2020 and 2021 than monetary policy. In the United States alone, national politicians influence the domestic economy in the form of direct payments to state and local governments, preferred industries (insurance, airlines), businesses (payroll “loans”), and individuals (subsidies). Put in more than $6 trillion of him. A form of stimulus check.
All this new money was also created when the coronavirus lockdown dramatically reduced the production of goods and services, disrupting global supply chains. So unlike monetary stimulus, where the central bank cuts interest rates and buys government bonds from commercial banks, the inflation we are suffering now is directly tied to fiscal stimulus. Pursuing fewer goods and services to make more money is a simple matter. Paying people to stay home without working was a recipe for disaster.
CG: After many unsuccessful attempts to simply deny its existence, central bankers have been forced to admit that inflation is indeed a problem, which is not surprising. but no one seems to want to take responsibility for it. “The “print, borrow, spend” approach of the past few years had nothing to do with it. Given the relatively low level of financial literacy among the general public, do you think most voters and taxpayers believe this narrative?
JD: The question is not only whether average people still believe in the technical ability of central banks to “manage” the economy, but whether they believe that central banks even intend to help average people. . The answer to both seems to be more and more “no”.
Less than 15 years after the last economic crisis in 2008, there is little evidence to support the idea that central banks prevent crises and crashes. Of course, the poorest are hit the hardest by inflation, as basic necessities such as food, utilities, transportation and rent make up the majority of their income. So I think the average person feels there is something seriously wrong with the financial and monetary system without understanding the underlying technical issues.
CG: Apart from the thousands of lives that the Ukraine war has already claimed and the immense damage to private and public property, there was another cause and effect: the legal protection of private property and the free market in Europe. Whatever was left seems to have disappeared overnight. Gas and nuclear power companies were nationalized, unprecedented interventionist and redistributive policies into oil and gas markets were imposed, and profitable energy companies were fined. “Inflation check” released to the public. Do you see a similar trend in the United States?
JD: The United States has been better protected from energy shocks caused by sanctions against Russia simply because it has large amounts of oil and natural gas domestically. However, due to environmentalist pressure, there is not enough refining capacity to make the most of the oil. Also, for a country with a population of 330 million, it does not have sufficient nuclear capability.
Yes, I think the events in Ukraine will advance the narrative of a “Green New Deal” that effectively nationalizes energy policies that promote so-called renewable fuels. Of course, all this is a pipe dream, and coal, oil and natural gas still account for over 80% of our energy use. And even ignoring the dreaded problems of lithium mining and battery disposal, it will take decades to secure the grid capacity for widespread use of electric vehicles.
Unless we are prepared to suffer a drastic loss in our material standard of living, Western politicians will stop fantasizing about green energy and get serious about a real market for reliable and cheap fossil fuels. Let’s hope and pray that people in Ukraine and Europe will not freeze to death from lack of energy this winter.
CG: Speaking of America,‘What is your assessment of the fiscal and regulatory policies adopted since Joe Biden took office?‘What could his administration do to avoid the current inflationary spiral, or was it always inevitable after years of being made?
JD: Biden is certainly responsible for increased spending under his administration, which results in enormous inflation. generated by fiscal and monetary policies enacted while he was a nepotistic US Senator. In that sense, his Senate record is far worse than his presidency. He is a clown and is easily led. This means that the “print, borrow, use” approach you mentioned cannot be challenged. But I hope people realize that Mr. Biden is a symptom of a much deeper problem.
CG: Focusing on the socio-political situation, at least from an outsider’s perspective,‘There is certainly less anger and controversy reflected in the international press than when Trump was in the Oval Office. “The wounds have healed,” and are Americans more united today, or are the rifts still widening?
JD: From my point of view, the rift is widening. Biden’s narrow victory is seen by the Left as an imperative to punish and defeat those who deplore, especially in rural areas. That is the nature of politics, a form of primordial violence. Markets and civil society are win-win institutions, government and politics are zero-sum. So we should expect the division to widen, unless we make political achievements less important, and if we don’t make life less politicized.
CG: There is a well-documented and growing distrust of the media, social institutions and legacy institutions in the United States and Europe. My own hope is that, especially after the pandemic, an obscene amount of prejudice has led more and more people to do their own research and “Educate yourself.” It may be reflected in the growing interest in educational content and programs offered by the Mises Institute.
JD: Of course. The digital age offers us the ability to seek out and find voices of reason and peace in the white noise of mainstream media. I don’t like to think it takes a real disaster to wake people up, but perhaps this is human nature.The more people worry about the economy and their future, the more they look for alternative sources of news and information. will be The Mises Institute is committed to being an alternative source of economic news and education.
CG: Another trend we have in common is “Green Agenda”. Despite the current crisis making it abundantly clear that the energy transition in Europe is catastrophically premature, “In the ‘cold and dark winters’ that millions of citizens are now facing, there is still extreme pressure for more. “This includes war on farmers at a time of unprecedented food price increases. Do you expect that to continue over the next few months and years?‘What is your expected impact?
JD: A food and energy crisis is certainly possible. In keeping with the “new normal”, the elite will use such crises to increase their power and make us suffer because of the problems they have caused. We know this because they’re outspoken about their plans to let them go, stop traveling, stop eating meat, stop owning a home. .
The fastest and most effective way to achieve this is to make housing, gas, and meat so expensive that only the rich can afford them. For example, we are already seeing consolidation of home ownership by private equity firms to create a land of renters in the United States. We see billionaires like Bill Gates investing in fake meat alternatives. Introducing recipes for dishes using insects in gourmet magazines!
None of this is normal or natural, but must be imposed by positive or negative incentives. If we want to preserve individual or family sovereignty for decades to come, we must recognize and resist this new program of imposed austerity.
CG: what‘What is the outlook for the U.S. economy in 2023? What are the main threats you are most concerned about, and what is your advice to responsible savers looking to protect them all?‘worked for their government‘incompetence or intentional abuse of
JD: I predict that the US Federal Reserve (Fed) will “turn around” to raise rates in 2023. That means going back to the normal (true) state of worrying more about the stock and bond markets than consumers and inflation. And my prediction is that the Biden administration will not be able to maintain much popularity or legitimacy, and that there will be more calls for a Democratic replacement to run for president in 2024.
Inflation, higher than government statistics allow, will be a permanent feature of the West in the 2020s. Government spending and budget deficits will continue to grow. As a result, it will be a very difficult decade for the saver. Gold and silver, commodities and bitcoin are the obvious propositions for those looking to protect themselves against devaluation, but the US dollar will continue to be strong against other currencies for a variety of reasons. is to “fortify” yourself against uncertainty by improving your skills and practicing self-education.
