STOP LYING ABOUT INFLATION
The Debt Is Not the Problem. The System Is.
The mainstream explanation of inflation is increasingly obsolete — and the bond market knows it.
There is something almost comical about the way economists continue to discuss inflation.
They argue about the Federal Reserve.
They argue about money supply.
They argue about deficits.
They argue about interest rates.
They publish models with impressive equations and then pretend that the economy will politely behave according to them.
Meanwhile, the bond market is sending a much simpler message:
The promises made by governments are becoming harder and harder to reconcile with reality.
That is the real inflation story.
And it is much more dangerous than the usual debate about whether the Fed should cut or raise rates.
THE MAINSTREAM IS WRONG — AND IT KNOWS IT
For decades, the dominant narrative has been remarkably convenient.
Central banks create money.
Money increases.
Demand increases.
Prices increase.
Central banks raise rates.
Demand falls.
Inflation disappears.
Beautiful.
Elegant.
And dangerously incomplete.
The real world does not work like that.
Inflation is not simply a monetary phenomenon.
It is not simply a fiscal phenomenon.
And it certainly cannot be reduced to a single variable in a textbook equation.
THE UNCOMFORTABLE PART
A government does not need to literally order its central bank to print money in order to create inflationary pressure.
It only needs to make promises that the economy cannot comfortably support.
Pensions.
Healthcare.
Defense.
Industrial policy.
Energy subsidies.
Tax cuts.
Infrastructure.
Social transfers.
Interest payments.
Every promise is politically attractive.
Every promise has a constituency.