It was about 1 or 2 years ago that I realized inflation is either growth-induced or debt-induced. That's right, it's that simple.

Debt-induced inflation is really only possible when an entity, for example a sovereign nation state that has a central bank, can produce “money” at whatever rate is desirable. So this is “fiat currency” – money is just created, it is not necessarily earned. Money is created when the authorities want it created, or it is not created and money becomes scarce. Debt-induced inflation is, quite frankly, a function of bankruptcy. Debt is large, so large that “servicing” the debt is difficult. More and more of your wealth – or money printing – goes to paying the “interest” on the debt. I am going to argue that in this situation the “economy” is actually not growing fast enough, or even not growing at all, to maintain so-called living standards or consumption.

Bankruptcy becomes inevitable, it slowly approaches, and in fact this is why interest rates trend downward. Growth is so small or negligible that no one is bidding for capital, to take on debt to expand their production. There's little interest in doing that because nothing is going on, there's no real growth. That's the situation facing the Ashkenazi-controlled American economy. At this time the US government debt service cost is about 15-16% of US government hard cash revenue. And this is with interest rates at a very low level, indeed they cannot really go much lower. Capital does not really yield anything. Yes, bankruptcy. There is not much anyone can do about debt-induced inflation. Liquidating the debt is basically the only way to resolve this. So bankruptcy has to happen, interest rates will then go way up, and the system will revert back to a much lower level of wealth. The central bank is useless if debt-induced inflation is ramping up and on track to implode. Raising "interest rates" merely raises the cost of servicing the debt.  

Then there is growth-induced inflation. Here you basically have the opposite scenario. Growth is so rapid that “production” of products and services cannot keep up with "demand" and so there is a bidding war for desired or required products and services. This is pretty obvious, right? This inflation, if it is growth-induced, can really get out of hand but it is also true that because it can get really out of hand it can also be pretty quickly brought under control. This will happen because of the government cutting back spending or raising interest rates – and sharply. This cutback results in “recession” and this recession cools down the economy and everyone begins to take a more relaxed view of production. This is the jargon that is commonly used, and I will also use it even though it is kind of stupid. By the way, scarcity of natural resources, or even labor, is going to be included as a major source of growth-induced inflation. Demand outstrips production. Crude oil is one very prominent example. Production of the resource cannot keep up with demand and so the price rises.

Several days ago I talked to the Federal Reserve Bank of New York. It was just a “communications talk” but still it was significant. I have never worked for the US government, I have never worked for a central bank, I have never worked as a so-called “economist” but this does not mean I do not have considerable influence – over policy or even over the overall approach to problems and issues.

My first introduction to “government policy” was about 30 years ago. I began to open something of a dialogue with Mr Alan Greenspan. He was the head of the Federal Reserve for almost 20 years. I would communicate with his assistant Mr Donald Kohn [who went on to become vice chairman of the Federal Reserve]. I found both of these gentleman to be generally OK, relatively honest. Under the leadership of Greenspan the Federal Reserve did undertake a very strong policy of supporting the stock market. This is normal to some degree but it was ramped up considerably with Greenspan. Hey, a lot of wealth is being generated so you do not want to step in the way of that. Right? I would certainly like to talk to both now and see what they think. Greenspan is 96 so I am not certain he is fully lucid. “Democracy” is an utter disaster and it will become obvious to the public – in the United States and around the world – within 10 years or so. It will be very shocking when the public begins to understand the reality.

The images below help augment and indeed clarify my arguments here. This is my view of inflation. I am doubting there is any analysis or explanation which is better. Certainly seems so. By the way, everyone to the left of Italy is basically bankrupt. I have also published below my Twitter commentary [@destructive_cap].