"Trump Just Told You How He’ll Pay Off the Debt"
by Joel Bowman and Lau Vegys
"Inflation is not an act of God… Inflation is a policy.”
~ Ludwig von Mises,
"Economic Policy: Thoughts for Today and Tomorrow" (1959)
Excerpt: Pipa Beach, Brazil - "Remember the good ol’ days, dear reader, when a trillion dollars seemed like a lot of money? When so-called “conservative” politicians at least pretended to care about fiscal sanity… balanced budgets… sound money… And when so-called “liberal” politicians pretended to care about things like the cost of living… free speech… the plight of the worker…
Neither side meant what it said, of course, insofar as their records stand in stark contrast to their empty promises, with nothing behind them save a trail of jilted voters and despondent, former believers. (And a few stubborn die hards, bless them!)
Perhaps that’s why so many “regular people” – sensible folks who wouldn’t trust their elected officials to water their cactus, never mind balance the nation’s books – find themselves political orphans, abandoned by their traditional parties. But though the political divide appears as vast as it has ever been, there is one thing both parties always seem to agree upon:
Inflation. How do we know that for sure? Well, the last time Americans were treated to a bout of sustained, consumer-price deflation was back in 2009, during the Great Recession. Before that, you have to go back to 1949, when CPI fell about 1.0% for the year. That’s 14 separate administrations, from Truman to Trump, stretched out over three-quarters of a century, each delivering for the American people exactly what the system is designed to produce: higher and higher everyday prices.
Again, politicians don’t usually admit as much, systematic currency debasement being somewhat out of favor for anyone who bothers reading their history. At least that was the case until last week, when POTUS actually said the quiet part out loud. For anyone who was listening, the frank admission (in an interview with Time Magazine) was tantamount to pointing out the empire had no clothes.
Devaluation, according to our good friend and founder of the excellent SNAFU Investing with Lau Vegys, is not an accident… it’s the plan. “Not default. Not cut spending,” as Lau writes below. “Inflate the debt away, hopefully quietly enough that nobody riots.” Yikes! “But what about the lenders?” we hear the savvy reader inquire. “Won’t they just walk away?”
Turns out, it’s a little more complicated than that. In today’s guest essay, Lau does a fantastic job of walking you through the mechanics of exactly how inflation works as a debt-reduction tool, how the administration intends to use “other means” to ensure a steady supply of lenders who cannot say “no,” and how those same hard-working people always end up footing the bill. Please enjoy today’s guest essay and be sure to find more of Lau’s writing at SNAFU Investing with Lau Vegys… there’s plenty more where this came from."
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