Too much debt and silly human behaviour created inflation crisis

It’s time to focus on what really matters: food, shelter, family and friends

To the Expositor:

I’m sure we’ve all recently experienced the pleasure of gassing up the buggy, and have watched with morbid fascination the cost display climb with greater enthusiasm than the amount flowing into our tank. To most of us, we think this is inflation and understandably so.

Surprisingly it’s not though. The cost increases we are seeing are a symptom. One of the end results of inflation. In broad terms inflation is the expansion of the supply of money. Literally the creation of new money. At the risk of being pedantic, it is important to emphasize a key distinction, that new money is not necessarily new wealth.

Using the US as an example, roughly speaking, in the last 20 years the money supply amount grew approximately 10 times. Meaning, that in 20 years there has been a 1000 percent additional creation of the amount of dollars in the system compared to all of the previous 240+ years of that country’s history. I don’t know what the figures are here in Canada, but we are playing the same game, as is much of the world.

During the financial crisis of 2008-2009 the global financial system came perilously close to seizing up. There has always been chicanery and malarkey in the financial universe, but the tomfoolery had reached such a level that we almost had a Tower of Babel moment. A chain reaction of not knowing what the rules are any longer. All it would have taken is a certain number of financial and governmental officials to have refused to play the game any longer because there was too much cheating.

So, what created this near disastrous situation. Too much debt and all the silly human behaviour that comes along with it.

What was the grand solution? Why Douglas, don’t you see? The answer is clearly more debt-based money creation. So much so, as to make the previous amount look inconsequential. Ah! Genius! Why didn’t I think of that?

In the novel ‘The Count of Monte Christo,’ the protagonist is verbally sparring with a pompous type that is rather too purse proud. To take him down a peg, the Count explains that there are three types of fortune. In paraphrased summary: First class is productive land and readily available treasures; second class is manufacturing facilities; and third class is fluctuating capital dependent upon the will of others.

Alexandre Dumas wrote this book in the 1840s and I suspect it is as timely today as it was back then.

How this Pandora’s box will develop and play out I can only guess. I do feel there is going to be a reemphasis on the things that truly matter.

Food, shelter, health, family and friends. If you told me these are the things that have only ever mattered, I would believe you.

To invest in those five things might not make you rich but it’ll make you fortunate. You can’t lose.

Douglas Miller