Trego's Mountain Ear

If I put my hand on a hot stove, I’m going to pull it back quickly.  Since I have a wood stove that burns half the year, I have the occasional reminder that I need to be a bit more cautious.  The psychology folks call it stimulus response.

Generally speaking inflation comes from printing more money.  Not always – the Spaniards kept importing gold from the American Indians, and inflated their currency.  I think the Nevada silver mines inflated European currencies that were based on silver.  But that’s history – now we inflate currency by printing more and more of it. 

It’s the problem with Bidenomics – first they printed more money, then when they saw it was causing inflation, they picked printing more money as a solution to the problem.  As a general rule, it takes 3 elections to teach a politician anything.  As the above chart shows – there are about the same number of hundred dollar bills in circulation as ones.  Thing is, they don’t circulate as fast (20 year life expectancy compared to 6 or 7 years for the dollar bills).

The chart above shows where the dollar has been devalued by inflationary printing – the Bretton Woods agreement (just above George Washington’s left eye) established the US dollar as the world’s reserve currency, and did reduce our vulnerability to inflation – but you can see where Nixon abandoned the gold standard.  BRICS – a consortium composed of Brazil, Russia, India, China and South Africa have been working at developing an alternative to the US dollar for international trade.  That has been unsuccessful, largely because their politicians are seen as worse than ours.