Friday, April 22, 2011

Inflation and Scapegoating

 I apologize for my long absence from this blog.  I've been absent for a variety of reasons, but this is an important post, and I thought it necessary to comment on it.

While reading Aleksandr Solzhenitsyn's novel November 1916, I was struck by the scapegoating during the inflationary crisis there during the First World War.  The government blamed farmers, merchants, and speculators for high prices as well as the accompanying scarcity of goods.  This scapegoating was accepted by the population at large creating great animosity toward producers by the urban classes.  The reality of the situation, however, was that the Czarist government had been putting heavy inflationary pressure upon the nation, required by wartime spending.  This sort of class rivalry added fuel to the revolutionaries who exploited these same arguments for their own ends.

As I read the novel last spring I knew that the day would come when America would face the same situation.  This article demonstrates that the finger pointing has begun.  The massive inflationary pressures unleashed through our government's deficit spending, TARP, QE, and QE2 have begun to work their way through the economy bringing economic disaster to Middle East countries unable to easily absorb the increasing food prices.  The unrest has added fuel to the inflationary pressures driving oil prices to well over $100 per barrel, and gas prices to $4 per gallon.  Gold has gone over $1,500 per ounce, silver to over $46 per ounce.  Wheat and corn prices are going up as well. 

But our government, in the tradition of all governments before them, are redirecting the blame to speculators, and away from themselves.  The article quotes President Obama saying, ""The Attorney General's putting together a team whose job it will be to root out any cases of fraud or manipulation in the oil markets that might affect gas prices - and that includes the role of traders and speculators. We are going to make sure that no one is taking advantage of the American people for their own short-term gain."

Naturally, if President Obama were truly interested in lowering the price of gas, he would pressure Fed Chairman Ben Bernanke to fight inflation, gut the federal budget, and work toward monetary reform.  But he, nor most anyone in the government is interested in doing any of those things.  Instead, expect to see further recriminations, scapegoating, redirection, and obfuscation.  We live in dark times, when government is the greatest menace in our society.  Our government is a predator, rather than a protector.  God help us!

HT: Mish

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