Just a quick post on something I heard Peter Schiff talk about, which has been discussed many times on his internet radio show over the past year.

He pointed out that the DJIA and other markets around the world have been climbing steadily and doing very well recently. He attributes the larger part of such gains to inflation. He used the Nikkei stock index as an example, citing that the day Japan announced it would continue printing money, thus causing inflation, the Nikkei rose in proportion to the inflation. This causal relationship can be applied to the other markets as well, including our own.

Peter also pointed out that gas prices are rising. Normally gas prices will rise if there is a disruption in supply, or if demand from economic growth outpaces supply. Despite those that like to point to Iran, I believe there is no impact, at least not yet, on gas prices from Iran as there has been no actual disruption in supply. I think Iranian sabre-rattling will be a convenient excuse for the politicians to use in hiding the rapid inflation they themselves are causing.

In fact if gas hits $5 or $6 a gallon, that would be quite a useful tool in the political hat trick toolbox to compel Americans to support yet another war, blaming all their fuel cost woes on a belligerent Iran.

So consider, that if the DJIA and other markets are rising which we have only personally experienced in the past due to impressive economic growth, and gas generally rises from the same impressive economic growth as rising manufacturing demands and consumer demands consumes more fuel, where is this impressive economic growth that is driving rising market and gas prices? There is none. We know this. So it can only be inflation.

So while the media and the politicians point to the markets as showing “signs of an economic recovery” the truth is that stock prices are only rising in value, in large part due to the inflation the Federal Government is creating which is destroying the purchasing power of the dollar, also known as “what’s in your checking account.” We have only seen stock prices rise when the economy is doing good, so we are applying the same assumption from then, to now. This is wrong. The markets are not rising from a good economy. They are only rising because of inflation.

Think of the insidiousness of our politicians in this regard. To purposefully destroy our currency, and then rely on the ignorance of the population so they can lie to them and reference a negative consequence of such currency destruction and sell it as a sign of a positive recovery attributable to the very same politicians. Evil! Brilliant! Successful!

Categories: Economy, Federal Reserve

Tags: affect of inflation on stocks, economic recovery, federal reserve affect on stocks, impressive economic growth, inflation affect on stocks, inflation drives the markets higher, Peter Schiff, sabre rattling, stock prices rising