How the federal government first will cause stagflation, then exacerbate it.

British Chancellor of the Exchequer Iain MacLeod invented the term, “stagflation,” to describe a combination of economic stagnation, high unemployment, and inflation.

Mobster Al Capone Ran a Soup Kitchen During the Great Depression ...
The Depression of 1929

Today, we’re well on our way. We already have economic stagnation and unemployment, and because of the inept way Congress and the President are operating, we soon will have inflation.

Americans on Cusp of Meat Shortage With Food Chain Breaking
By Michael Hirtzer and Jen Skerritt, Bloomberg, April 27, 2020

The coronavirus pandemic is pushing the food supply chain to its limits.

Plant shutdowns are leaving Americans dangerously close to seeing meat shortages at grocery stores. Meanwhile, farmers are facing the likely culling of millions of animalsand mass burial graves could soon be dug across the heartland.

“The food supply chain is breaking,” said John Tyson, chairman of Tyson Foods Inc., the biggest U.S. meat company.

Outbreaks are forcing the closure of some of the country’s biggest slaughterhouses, where tens of thousands of animals are processed daily.

As the plants shutter, producers are left with nowhere to sell their livestock. It’s forcing farmers to make gut-wrenching decisions to dispose of their animals.

The situation is so severe that the U.S. government is setting up a center partly to assist on “depopulation and disposal methods.”

Smithfield Foods Inc., the world’s No. 1 pork producer, and JBS SA, the biggest global meat company, say that consumers are likely to see meat shortfalls.

10,000 Line Up For Free Food In San Antonio - News & Guts Media
Food lines: 2020

“It’s absolutely unprecedented,” said Brett Stuart, president of Denver-based consulting firm Global AgriTrends. “It’s a lose-lose situation where we have producers at the risk of losing everything and consumers at the risk of paying higher prices. Restaurants in a week could be out of fresh ground beef.”

Meat prices are surging on the supply disruptions. U.S. wholesale beef has surged to a record, and wholesale pork soared almost 30% last week.

And these shutdowns are happening at a time when global meat supplies were already tight. China, the world’s top hog producer, has been battling an outbreak of African swine fever, which destroyed millions of the country’s pigs. Plus the virus is hitting production after some meat companies had already taken steps to slow output because of the closure of restaurants around the world.

Meanwhile, plants are also facing a labor crunch as employees fall ill. It’s been reported that a large chicken-processing company was forced to kill 2 million of its birds earlier this month because of worker shortages.

And speaking of worker shortages:

Here is what you can foresee as the greatest danger to America since the Civil War:

1. Meat prices will first fall because of oversupply; then prices will rise dramatically as animals are culled and shortages begin.
2. When the Fed sees the resultant inflation, it will increase interest rates, which the stock markets will perceive as a negative signal, and act accordingly.
3. Congress will see inflation and falsely attribute it to “excessive” federal stimulus spending, so it will institute austerity by cutting spending and raising taxes.
4. The resultant lack of federal financial support for businesses and consumers will exacerbate the current massive unemployment and a recession, the first two legs of stagflation.
5. The recession will cause economists, politicians, and the media to demand further austerity — tax increases and a reduction in federal spending — which will drive us down into a depression.
5. With each drop in GDP, demands for greater austerity will be issued.
6. Meanwhile, a strongman will emerge to claim that the situation calls for laws giving him the power to cure the depression, which he will not do.
7. Instead, he will use those new powers to enrich himself and his family, which he will appoint to unassailable positions of political, monetary, and military power.
6. The depression will widen the Gap between the rich and the rest, leading to an American autocracy, obliterating the results of the Revolutionary War.
7. Ultimately, America will turn into a shadow North Korea or Cuba where a single family wields ultimate power for decades.

And it all will have begun with five myths:

Myth I. Federal deficit spending is unsustainable.
(Fact: The federal government, being Monetarily Sovereign, can sustain any amount of deficit spending. It never can run short of dollars, and does not need or use tax dollars to fund spending.)

Myth II. Federal deficit spending leads to inflation.
(Fact: Food and/or energy shortages, not deficit spending, cause inflations. Thus inflations actually can be cured by deficit spending to create or obtain and distribute the scarce products.)

Myth III. Austerity, which takes money from the economy, is fiscally prudent.
(Fact: The lack of federal deficit spending leads to recessions and depressions.)

Myth IV. During financial emergencies, the protections afforded by the Constitution must temporarily end until the crisis passes.
(Fact: The Constitution was written during a time of financial crisis. Crisis is what the Constitution was designed to cope with, but the Congress and the U.S. Supreme Court will agree with ending Constitutional protections, as they often have during crises.)

Myth V.  During a financial crisis, the nation must come together behind a strong leader.
(Fact: The single greatest financial crisis facing America is the immoral and widening Gap between the very rich and the rest. The nation must come together, not behind a strong man but behind strong morals, to lift up the poor and downtrodden. Narrowing the Gap will make America Great, Again.)

That is our America, the America who built the most admired nation in the world, the America who created the Bill of Rights, the America who displays the Statue of Liberty on its shore, upon which are inscribed the immortal words:

“. . .  Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
. . .  “Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me . . .”

When we speak of “the American dream,” that is the dream. When we speak of the American way, that is the way.

And it all is possible if we reject the myths promulgated by cold-hearted, mean-spirited, ignorant rich men, whose only wish is to climb by stepping on the backs of the rest of us.

We have a federal government with the power to eliminate poverty, not exploit it. That could be our strength. That could be who we are.

That, not raw, exclusionary power, could really be what makes America great, again.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell



The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.


8 thoughts on “How the federal government first will cause stagflation, then exacerbate it.

  1. What happens when you keep hiring and firing incompetents to run your business:

    Gears Jammed Again During Relaunch of Small-Business Relief Program
    Shortly after the SBA’s Paycheck Protection Program restarted this morning, lenders reported that they either couldn’t access the system or were being kicked out as they tried to submit applications on behalf of small-business owners, said Paul Merski of the Independent Community Bankers of America.

    Rob Nichols, president and chief executive officer of the American Bankers Association, said in a tweet that his member banks across the country “are deeply frustrated at their inability to access” SBA’s system. He said the association has “raised these issues at the highest levels,” and until they are resolved, banks “will not be able help more struggling small businesses.”

    The glitches echo the first round of the program, when lenders were repeatedly locked out of the loan platform. The initiative restarted Monday with $320 billion in fresh funds after the initial $349 billion ran out after just 13 days. Some lenders had thousands of applications ready to go when the system restarted, fueling concerns the extra money would run out fast.

    And these excerpts from a very informative article:

    Behind Trump’s Failure on the Virus

    The National Security Council office responsible for tracking pandemics received intelligence reports in early January predicting the spread of the virus to the United States, and within weeks was raising options like keeping Americans home from work and shutting down cities the size of Chicago. Mr. Trump would avoid such steps until March.

    Despite Mr. Trump’s denial weeks later, he was told at the time about a Jan. 29 memo produced by his trade adviser, Peter Navarro, laying out in striking detail the potential risks of a coronavirus pandemic: as many as half a million deaths and trillions of dollars in economic losses.

    The health and human services secretary, Alex M. Azar II, directly warned Mr. Trump of the possibility of a pandemic during a call on Jan. 30, the second warning he delivered to the president about the virus in two weeks. The president, who was on Air Force One while traveling for appearances in the Midwest, responded that Mr. Azar was being alarmist.

    Mr. Azar publicly announced in February that the government was establishing a “surveillance” system in five American cities to measure the spread of the virus and enable experts to project the next hot spots. It was delayed for weeks. The slow start of that plan, on top of the well-documented failures to develop the nation’s testing capacity, left administration officials with almost no insight into how rapidly the virus was spreading. “We were flying the plane with no instruments,” one official said.

    By the third week in February, the administration’s top public health experts concluded they should recommend to Mr. Trump a new approach that would include warning the American people of the risks and urging steps like social distancing and staying home from work. But the White House focused instead on messaging and crucial additional weeks went by before their views were reluctantly accepted by the president — time when the virus spread largely unimpeded.

    When Mr. Trump finally agreed in mid-March to recommend social distancing across the country, effectively bringing much of the economy to a halt, he seemed shellshocked and deflated to some of his closest associates. One described him as “subdued” and “baffled” by how the crisis had played out. An economy that he had wagered his re-election on was suddenly in shambles.

    He only regained his swagger, the associate said, from conducting his daily White House briefings, at which he often seeks to rewrite the history of the past several months. He declared at one point that he “felt it was a pandemic long before it was called a pandemic,” and insisted at another that he had to be a “cheerleader for the country,” as if that explained why he failed to prepare the public for what was coming.

    And the government keeps lying about federal finances:

    Red states need coronavirus bailouts, too

    The idea that Democratic-run states are struggling and Republican states are thriving is false. There is plenty of pain to go around.

    Indeed, my home state of Kansas, which gave Trump its six electoral votes in 2016 and is by no means a blue state, now has a $1.3 billion hole in its budget thanks to the pandemic. We’re not the only ones in trouble. Missouri officials are trying to find $700 million in cuts to their budget. Texas officials are contemplating an immediate 5 percent across-the-board cut to state agencies. Pennsylvania is facing a whopping $4 billion shortfall. Each of these states’ legislature is controlled by Republicans. Each state gave its electoral votes to Trump in 2016.

    Still, on Monday the president tweeted: “Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as an example) and cities, in all cases Democrat-run and managed, when most of the other states are not looking for bailout help? I am open to discussing anything, but just asking?”

    “These are well-run states,” said Maryland Gov. Larry Hogan, a Republican, whose own state faces a $2.8 billion shortfall. “There are just as many Republicans as Democrats that strongly support” a bailout.

    And then there’s this from the “Party of the Rich”

    ‘No Consequences for Negligence That Kills’: McConnell Wants Corporate Immunity From Covid-19 Lawsuits
    Hey, companies should be able to do whatever they damn well please. The stupid workers will vote for us anyway.


  2. Yes he’s open to discussing anything, but the discussion won’t last long if you try to make sense. He gets in a corner that he can’t get out of except by lieing or changing the subject. Some discussion. More like disgustion.

    The Covid virus is also an econ chain-breaker. Probably before you see the 7th step where “America will turn into a shadow North Korea ..” the factory-to- wholesale-to-retail markets will have been disconnected. This lifeline connection of everything to everything will perhaps be realised too late unless the corrupted media is allowed to speak freely, and in time.


        1. “The economists Milton Friedman and Anna Jacobson Schwartz demonstrated in “A Monetary History of the United States” that a collapse in the quantity of money was the main cause of the Great Depression.” I agree.


        2. “The U.S. Federal Reserve has established nine new lending facilities in its efforts to supply the entire world with dollar liquidity. Buying all manner of private and public debt has expanded the Fed’s balance sheet from $4.1 trillion in late February to over $6.5 trillion by mid-April. Analysts have predicted its balance sheet is on course to reach $9 trillion by the end of the year. Suffice it to say, at its present pace, the Fed is injecting about $1 million into the financial system every second, with a declared upper bound of infinity.”

          Liquidity is not the problem. Money supply is the problem. The Fed cannot solve it. Only Congress and the President can by sending money into the private sector. Unfortunately, between two fools, McConnell and Trump, the belief still lingers that adding dollars is bad.


  3. “..Perhaps. Consider the fact that there is a bottom to demand and no bottom to supply…”

    So true. You can only eat what your stomach will hold, which isn’t much. Once the stomach is full, and the future deemed secure, the need for excessive filling stops. Monetary Sovereignty will fill “stomachs” and bring a halt to conspicious consumption prodded by a dysfunctional, pre-industrial, agrarian, scare-city model.

    The most important stomachs to be fed will be that of billions of mis-lead human minds starving for and fed by truth.

    Liked by 1 person

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