3 Currency Inflation Waves, We are Now into the Third Wave

Greed-Flation Ending Soon :) Social Pressure, Interest Rate Hikes, Government Regulation, Brand Damage, New Pricing Strategies, Lowering Food Prices. Many forces are at work to make life more affordable since wages have been stagnating. 

US Federal reserve interest rate hikes have helped to reduce currency inflation of the US dollar which peaked during the second wave last year at 9.1 percent. Do you understand what a fiat currency is? Its a paper currency note issued by military industrial power of the nation that issues it.

This means that the more powerful your countries economy, the more value the currency has. That also tells you that the increasing consumer price index of goods making everything from food and fuel to rent & home prices more expensive because the currency has lost a lot of its value.

The American economy peaked in 1968. Notice when the USD was delinked from gold prices in 1964 the American economy boomed for a few years then stag-flated and entered a longer-term boom bust cycling mode with slowly increasing frequency of the booms & busts. Buy low & sell high said Wade Cook who was later imprisoned for financial crimes. 

Fed Res chairman Jerome Powel spoke about the worst inflation in 40 years. "Greed-flation" a new term used to define how businesses are capitalizing new forms of profit from the situation by jerking up prices of everything & blaming the cost increases on currency inflation, when in reality its some of bother effects, inflation making the money worth less so consumers need more to buy an item, while businesses also increase the price of stuff they are selling that makes everything even more expensive. 

Economists from investment banks & regulatory agencies are saying that businesses are using excuses to justify radically increasing the prices of goods and services. Much of the price increases are just to increase profits, not because of inflation of the currency. 

Covid 19 pandemic supply chain problems gave rise to radical price increases on graphics cards for example as there was a massive cultural shift to school & work from home on desktops that people like to play popular e-sports games like CS:GO my personal favorite. These games play well on machines with a dedicated graphics card. Many graphics cards were selling for 2-4X the MSRP during the initial phases of COVID in 2020, while it took until recently in Q1 2023 for the prices to come down. 

When Russia invaded the Ukraine in February 2022, this caused market destabilization effects worldwide that effectively increased the prices of many raw materials, oil, goods of other kinds & services. In markets served by Russian oil & gas companies, the cost of fuels have risen sharply as sanctions placed on Russia have cut off oil & gas product exports, so importers of such have had to turn to other more expensive sources. Some retail gasoline prices in some parts of Europe rose 30-45% and have remained elevated as a result of Russian oil and gas sector sanctions. 

It was 1980's America where we saw a major spike of inflation increase the prices of everything. Back then some businesses increased prices & profits and blamed their increases on currency inflation & we are seeing the same things happening again now in middle 2023. The American stimulus payments were another form of quantum easing that increased the supply of money, thus lowering its value, a process called currency inflation. 

Price gouging, rip-off's, scams. I hate overpaying for anything. I hate that rent rising, food prices rising, home prices are out of control nearby. I hate that used car prices are higher than the brand new MSRP. I hate markets that reward excessively greedy businesses. I understand why North Korea blocks markets from forming, though that doesn't work very well because of corruption in the communist party. 

The problem is that human sin nature makes it impossible to execute a perfectly planned state economy. I am theorizing that it is possible to use computer server AI systems as the state machine to make a perfected state planned economy by reducing errors that humans would introduce into systems with so many parts. In the same way that AI tools help EDA software help engineers design chips, AI tools can create a perfect communist state. Imagine that NVIDA designs the economy of a planned economy state using the same kind of logic & AI tools they used to make GPU's.

This kind of highly optimized, highly refined & highly intelligent system design approach can enable an AI State to execute perfected communism. Even in market economies, AI tools can be used as master regulatory control mechanism to stabilize markets & limit the negative effects of high speed trading & other instability increasing phenomenon. 

The Fed want's to limit inflation to 2% and raising the interest rate has helped to get toward this target, but its hard to control all the global macro-economic issues that are also affecting the currency value. 

Greed-flation will not last forever as consumers reduce spending in response to prices that are too high & if they do not feel comfortable about the future of their job, income earning potential, market stability, or government. Market destabilizations are temporary or transient in nature & like many chaotic processes such as storms, eventually run out of steam & normalize. The trend towards equalization happens as people realize that everything is ok and that a lot of hype & drama was responsible for the loss of social confidence that gave rise to the market instability in the first place. 

When companies raise prices too much it damages their brand as people associate the new Rolex with a "Thats not fair, rip off price" ideology, when you can buy an alternative that's superior for 30X less for example in the case of the Rolex wristwatch vs a Seiko 5 that looks better & performs better with better  time accuracy & reliability.

When Rolex started their wrist watches were affordable well made durable models that sold well to regular people. The current Rolex prices of $10,000 + for a watch are seen by many people as "Cheating or unfairly treating the consumer". Rolex was using ETA movements until recently anyway. 

Commodity prices are starting to decline as oil goes under $100 per barrel, making fertilizer, plastics, pesticides & fuels in some locales more affordable. Gasoline sells locally for over $5/ gallon while in other parts of America the same exact fuel sells for around $3/ gallon. This is greedy price gouging not market forces at work. 

Many industrial food companies have pledged to lower food prices, since food price increases have been disproportionately harmful to people with low incomes, the marginalized working class, and hollowed out working middle class of Americans for example. 

There is a Joke as the US treasury that the $100 bill the "New Twenty" referencing the dramatic loss in buying power of the US dollar. 

Many other governments around the world are putting downward price pressure on food companies to make foods more affordable. Similar in-roads are being made to make life saving medications like insulin more affordable. Deregulatory improvements to technology have also made hearing aids more affordable. Many that were selling for $2000 to $20000 per pair are now available from other vendors with the same or better technology for few hundred dollars. 

On social media there has been a huge push back against excuses made for the price increases. Serious brand damage has been done to companies viewed widely as engaging in excessive margins during a time when people are really suffering to pay bills for life's basics. This is squeezing companies with social pressure in e-commerce & retail, to lower prices. In the last two years real wage growth has declined.