In Jim Cook's Archive


A discussion among economists of the Austrian School was recently printed in a publication of the Mises Institute. In commenting on warnings of inflation ahead economist Peter Klein said, “As the Austrians explained, a monetary-induced expansion is not indefinitely sustainable. You cannot create real wealth by turning on the money press… When will we see the effects play themselves out in terms of increases in prices… That’s very difficult for us to say, and a lot of our enemies, the Krugmans of the world have been kind of beating Austrians over the head by saying, ‘Oh, you guys have been predicting hyperinflation, but where is the hyperinflation. Obviously your theories are disproven by reality.’”

I disagree with anyone who doesn’t see serious inflation. In the past 10 years, inflating has been centered in assets.  Stocks like GameStop, and cryptocurrencies like Bitcoin personify asset inflation. A painting by a computer that sells for $63 million and a LeBron James rookie bubble gum card that brings $5 million are outrageous examples of runaway inflation. The Bureau of Labor’s inflation index of 2% doesn’t harmonize with real-life experience. A visit to my dentist to pull a tooth and put in the foundation for an implant was $7,500. A friend recently got an estimate of $18,000 to fix his auto after a minor accident. When I first started in the precious metals business in 1973, an associate who worried about inflation made the shocking prediction that bread, which was then selling for $0.25 a loaf, would someday be $1.00 a loaf. I laughed at him.

If you own a lot of things, asset inflation can be quite enjoyable. However, when we begin to see price hikes in almost everything, it becomes painful for the citizenry. We could soon be experiencing the painful variety of inflation as living costs go through the roof. The warnings of the Austrian School of Economics must inevitably come to fruition. The monetary authorities are flirting with disaster, for if ever the government’s subsidy checks no longer buy much, it will be a dangerous time for all.

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