Who created inflation? (There is no bubble in the asset market? No. - Paul Volcker, 2016)

That's really nonsense. My grandchildren can't buy a house because house prices are too expensive. But there's no bubble in the asset market? - Paul Volcker, 2016 about Yellen's speech -

In times when the truth is ignored, people don't think deeply. Then, the truth is far out there and you will find you make unfounded claims as a habit. For example, you might say that you hate the government for spending money on the weak and that is why inflation is happening. The stinginess of the rich, but endless dissatisfaction with money, are everyday occurrences.

However, try to recall a little bit. How much has the government been inflating the asset market? The FED fooled the people. If the lie is repeated for a long time, it becomes as if it is the truth and people cannot do proper thinking.

They removed house prices and stock prices from inflation indicators. How much have stocks risen since the financial crisis? It was the time when had been nearly nine months since warnings about inflation began popping up here and there. The asset market was rising sharply but, people were shocked when Powell said that inflation indicators were still not high.  Even, he continued to pour money into the real estate market even when inflation had already reached high levels. Although he admitted he made a mistake, he bought real estate bonds until one year, saying it was a promise to the mayor.

Powell famously said that he had never even thought about when to discuss whether to raise interest rates. Even he promised to notify people about the time.  It means they would tell you a year in advance when the police would come. It was the best condition for boosting all assets, including virtual currency.

What on earth causes prices to rise? That's because house prices have soared. There has been a continuous asset bubble with zero interest rates since 2008, which was further compounded by extreme money lending during the pandemic. Unaffordable rent is the most fatal cause of inflation. People will desperately look for jobs that pay even a little bit more, some people will give up marriage, and weakened retired elderly people will end up on the streets because they can't pay rent.

The asset market does not call this tragedy inflation, but Goldilocks. Powell said bread is still cheap and there is no inflation. They said we look only at core inflation. And then he said it's just temporary. This is degrading and intentional fraud. I felt that he was committing a deceptive crime at the time. Why did they create inflation? They said the asset market is important, but instead of protecting the market, they created a bubble. Only the rich 10% of people with 90% stock holdings made core profits.

Is that all? Trump gave tax cuts to corporations. The poor had to bear the impact of lost welfare and tariffs. Companies even borrowed money at low-interest rates to buy their own stocks. What if the company had used the money to build a house, rather than use it to evaluate assets? Before building a house on Mars.

When the pandemic broke out, Ray Dalio said we needed to put money in people's pockets. Surprisingly, even though a small number of people have all the money, they do not spend it, so the world does not collapse only if ordinary people spend the money.

Money given to the weak is not the cause of the asset bubble but is only the driving force that makes the world go round. Of course, it is also true that there was excessive support. It was meant to keep people at home during the pandemic. But the money flowed into the stock market. Even so, Robinhood is not the cause of the asset bubble.

The money goes back to companies again. In an age increasingly driven by machines, talking about productivity is also political. I'm not talking about the middle class or the wealthy. I'm not even talking about unions that use violent means to obtain wealth from wealthy individuals. I'm talking about people being pushed out onto the streets in the richest and largest country.

Because it is one of the completely wrong things to inflate the asset market with such persistence and tenacity that the poor and weak cannot even survive. The practice of purchasing government bonds with taxes to create a low-interest rate environment, making the rich even richer and imposing pain on the poor, must stop.

Those in power make lies the truth. However, saving people is the ultimate task of a democratic nation, and politics and society must correct themselves based on that. If you want to say you think you need an asset bubble, you should first talk about how to fully reverse the wealth before you say that.


Anna Aren
Translated by Google.

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Paul Volcker, 2016