Monetary debasement (also referred to as inflation), makes all financial analysis very difficult.
When we assume a constant-value US dollar we are kidding ourselves but trying to account for a steadily declining dollar is very complicated.
And besides that, we don’t even know the rate at which the dollar is being debased because the US Federal Reserve stopped publishing the M-3 money aggregates in March of this year.
Inflation adjusted wages have been declining steadily for several years now. I don’t see anything on the horizon to change this trend.
I would modify your statement “If inflation is raging, interest rates would also be sky high.” to “If inflation is raging, interest rates SHOULD also be sky high.”
Paul Volker (Fed Chairman from 1979-87) raised interest rates into the 20% range to control the inflation raging at the time.
Raising interest rates enough to contain inflation today would cause the housing bubble to collapse worldwide.
So, take your pick, do you continue printing the US dollar and let inflation rage (while driving the value of the dollar to zero) or do you reign in the monetary debasement and raise interest rates to where they should be (in an attempt to save the dollar) and then watch the world’s economy collapse? Not a great choice is it? Coming soon to a theatre near you …
