QUESTION: Mr. Armstrong, I have listened to the gold propaganda and believed in it initially but with time they always say the same thing and nothing happens. One would think that this helicopter money should have produced inflation. This effort has failed as Japan and Europe keep moving negative punishing people for not spending. Now it seems that Americans are also starting to save more and spend less. Do we need reinflation and can government even tackle such a task?
Thoroughly confused
Thank you for your efforts
SJ
ANSWER: Governments have been pretending they can control the economy ever since Roosevelt adopted Marxism. The root of our problems lies directly in this idea that government can steer the economy as it desires. The rise of Trump and Sanders proves that something is wrong beneath the headlines.
There is a growing awareness today that the financial markets are beyond the control of national policymakers. We are even beginning to hear people in the business saying that publicly. While a few economies do have the scale to shape interconnected global markets with trade barriers, etc., they face serious constraints in doing so, not to mention political and economic consequences. As a result, the global economy is stuck in a declining financial cycle with few options for escape.
This idea of helicopter money is poorly constructed and assumes that the quantity of money is the explanation for inflation. There is no historical evidence of that proving to be true. The Roman Empire funded its budget on a general mix of 80% taxes and 20% through the creating new money. This did not result in 20% annual inflation.
Look closely at the chart above. The sharp collapse takes place because Maximinus I (235-238AD) declared war on the rich. He simply declared that all their wealth was his and paid informants to report on anyone they thought had unreported money.
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