The famous quote, “Insanity is doing the same thing over and over again and expecting different results,” is usually attributed to Albert Einstein. While intended as a parable for quantum insanity, such a quote could equally be a parable for inflation policy. With the Bank of England and the Federal Reserve seeking to maintain target rates of 2 percent, the UK inflation rate has only fallen to 10.7 percent from 11.1 percent. Considering inflation is still exceptionally high, it may be time to acknowledge the problems of inflation target policies.

The UK first began inflation targeting as a monetary policy in 1992 to maintain a predicted level of inflation for future economic planning, persistent inflation rate acknowledgment, and price stability maintenance. There are, however, many troubles with inflation targeting. It is important to fully understand the problems with inflation targeting and to define inflation more comprehensively. The common definition of inflation is a general increase in the price level; however, this definition neglects to address the cause of inflation and deals only with the effect.

Inflation has always been an excess increase in the money supply leading to a depreciation in the purchasing power (real value) of money. This definition most accurately explains the cause of inflation whereby the effect of an inflationary policy is a general increase in prices. Prices will not rise uniformly since people demand different goods at different quantities and timeframes, and some goods are more demand inelastic than others.

To use the common definition of inflation is to ignore that the general price level may change due to a shortage of some good used in multiple production periods and processes. As Nicolás Cachanosky, an assistant economics professor at Metropolitan State University, states, “defining inflation by describing a movement of a variable that can have multiple reasons invites confusion. This confusion can eventually lead to errors in monetary policy. More accurate would be to define inflation by its cause rather than its effect.” An inflation target policy simply provides a positive rate of inflation over a prolonged, consistent period of time; this is otherwise known as secular inflation. Keeping in mind a definition of inflation that focuses on the cause rather than the effect, as well as the depreciation of purchasing power, we see that a policy of inflation targeting (secular inflation) leads to a shorter timeframe for the utility of money (expiration date of money).

To explain the expiration date of money, suppose an individual has two Great British pounds. Let us assume that this individual, named A, saves 50 percent of every pound he earns; A will spend one pound and save one pound. Under a 2 percent policy of inflation targeting, the pound A saves will have its value depreciated to ninety-eight pence after one year. To hold the same level of purchasing power and same real value of his savings, A must earn an additional two pence per pound next year. Due to this annual 2 percent inflation target, two years from now, A will have to earn an additional four pence per pound to hold the same real value or risk his money being worth ninety-six pence per pound.

Due to the nature of individual time preference, whereby there is a tendency for people to prefer current consumption over future consumption, A is likely to alter his consumption preferences toward current consumption. This is particularly true if A sees the opportunity cost of not consuming today as being unable to consume as much next year because his money’s real value has fallen. This would lead A’s savings rate to drop to thirty pence for every pound and his consumption rate to rise to seventy pence for every pound.

This ultimately leads to the velocity of money rising and the demand to hold money falling as excess money circulates. Consequently, this leads to an artificially high level of consumption, a lack of saving, and a finalization of the effect of inflation (a general rise in prices). While many Austrian economists do not view velocity as a useful concept, the velocity of money is simply a measurement of the rate at which money is spent throughout the economy. It is difficult to deny that, if velocity were at zero (no one spends anything), the general price-raising effect of inflation would cease.

What about the goal of price stability? Is it not desirable to have stable prices? The answer concerns the fact that inflation targeting fails when there are large supply shocks such as an increase in productivity. In fact, such price stability measures, via inflation targeting, provide faulty signals over the value of entrepreneurial endeavors and mask real productivity gains.

Central banks look to combat deflation since most economists believe deflation is negative for the economy. A consumer good falling in price here or there is no issue, but, when all (or most) goods are falling in price, it is a sign of economic depression.

In the UK, from March 2014 to December 2015, consumer and producer prices fell consistently which would have surely been seen by the Bank of England as a twenty-two-month depression. The consumer price index (CPI), from March 2014 to December 2015, is shown below. Over a twenty-two-month period, the CPI fell roughly 67 percent.

Source: Data from OECD Data (Inflation [CPI], accessed December 22, 2022).

Over the same twenty-two-month period, the producer price index (PPI) fell by 5 percent.

Source: Data from OECD Data (Producer Price Indices [PPI], accessed December 21, 2022).

However, looking at gross domestic product’s (GDP) monthly changes over the same twenty-two-month period, the economy was not depressed. In fact, GDP gradually increased.

Source: D. Clark, “Monthly Index of Gross Domestic Product in the United Kingdom from January 1997 to October 2022f” (data set), December 12, 2022, Statista.

The dotted lines represent the progression of CPI, PPI, and GDP. The CPI and PPI show a gradual decline, but, instead of falling GDP, the economy actually grew. Inflation targeting and price stability policies veil real changes in productivity. By attempting to maintain nominal prices at a stable level, real changes in productivity, both negative and positive, are either dampened down or fully obscured.

Price stability and positive inflation rates should not be the goals of monetary authorities as such policies create financial instability. Prices should fluctuate to reflect the productivity of individual industries, the economy, and the efficient (or inefficient) allocation of resources. Instead, monetary authorities should seek to maintain a stable money supply. Such a rule, aspiring to achieve monetary equilibrium and financial stability, has existed in the past. Unfortunately for the UK, the Peels Act of 1844 saw an end to that. The future is (and always will be) inflation.

Money supply growth fell again in November, and this time it turned negative for the first time in 33 years. November’s drop continues a steep downward trend from the unprecedented highs experienced during much of the past two years. During the thirteen months between April 2020 and April 2021, money supply growth in the United States often climbed above 35 percent year over year, well above even the “high” levels experienced from 2009 to 2013. 

Since then, the money supply growth has slowed quickly, and we’re now seeing the first time the money supply has actually contracted since the 1980s. The last time the year-over-year change in the money supply slipped into negative territory was in February of 1989. At that time, negative growth continued for 12 months, finally turning positive again in February of 1990. 

During November 2022, year-over-year (YOY) growth in the money supply was at -0.28 percent. That’s down from October’s rate of 2.59 percent, and down from November 2021’s rate of 6.66 percent. 

The money supply metric used here—the “true” or Rothbard-Salerno money supply measure (TMS)—is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. The Mises Institute now offers regular updates on this metric and its growth. This measure of the money supply differs from M2 in that it includes Treasury deposits at the Fed (and excludes short-time deposits and retail money funds).

In recent months, M2 growth rates have followed a similar course to TMS growth rates. In November 2022, the M2 growth rate was -0.03 percent. That’s down from October’s growth rate of 1.25 percent. November’s rate was also well down from November 2021’s rate of 12.40 percent. 

Money supply growth can often be a helpful measure of economic activity, and an indicator of coming recessions. During periods of economic boom, money supply tends to grow quickly as commercial banks make more loans. Recessions, on the other hand, tend to be preceded by slowing rates of money supply growth. However, money supply growth tends to begin growing again before the onset of recession. 

Another indicator of recession appears in the form of the gap between M2 and TMS. The TMS growth rate typically climbs and becomes larger than the M2 growth rate in the early months of a recession. This occurred in the early months of the 2001 and the 2007–09 recession. A similar pattern appeared before the 2020 recession. 

Notably, this has happened again beginning in May this year as the M2 growth rate fell below the TMS growth rate for the first time since 2020. Put another way, when the difference between M2 and TMS moves from a positive number to a negative number, that’s a fairly reliable indicator the economy has entered into recession. We can see this in this graph: 

In the two “false alarms” over the past 30 years, the M2-TMS gap reverted to positive territory fairly quickly. However, when this gap firmly enters negative territory, that is an indicator that the economy is already in recession. The gap has now been negative for 6 of the past 7 months. Moreover, in both September and October, the gap was greater than -1. There is only one case—1998—in more than 30 years during which the gap was greater than -1 and the US not in recession.

Interestingly, this indicator also appears to follow the pattern of yield curve inversion. For example, the 2s/10s yield inversion went negative in all the same periods where the M2-TMS gap pointed to a recession. Moreover, the 2s/10s inversion also fell into negative territory in 1998. This is not surprising because trends in money supply growth have long appeared to be connected to the shape of the yield curve. As Bob Murphy notes in his book Understanding Money Mechanics, a sustained decline in TMS growth often reflects spikes in short-term yields, which can fuel a flattening or inverting yield curve. 

It’s not especially a mystery as to why short-term interest rates are headed up fast, and why the money supply is decelerating. Since January of 2022, the Fed has raised the target federal funds rate from .25 percent up to 4.0 percent. 

This means fewer injections of Fed money into the market through open market operations. Moreover, although it has done very little to sizably reduce the size of its portfolio, the Fed has nonetheless stopped adding to its portfolio through Quantitative Easing, and allowed a small amount (about $358 billion out of $8.9 trillion) to roll off. 

It should be emphasized that it is not necessary for money-supply growth to turn negative in order to trigger recession, defaults, and other economic disruptions. With decades marked by the Greenspan put, financial represssion, and other forms of easy money, the Federal Reserve has inflated a number of bubbles and zombie enterprises that now rely on nearly constant infusions of new money to stay afloat. For many of these bubble industries, all that is necessary is a slowing in money-supply growth, brought on by rising interest rates or a confidence crisis. 

Thus, a growth rate in money supply turning negative is not in itself an especially meaningful metric. But the drop into negative territory does help illustrate just how far and how rapidly money-supply growth has fallen in recent months. That is generally a red flag for economic growth and employment. It also serves as just one more indicator that the so-called “soft landing” promised by the Federal Reserve is unlikely to ever be a reality. 

I first became aware of the Property and Environment Research Center (PERC) after moving to Montana and was immediately intrigued by their work. The more I dug into PERC’s research, the more I realized they aligned with my worldview of free market conservation. The CEO of PERC, Brian Yablonski, graciously met with me to discuss PERC’s initiatives. Even after two hours, we had barely touched the surface of PERC’s free-market, conservation initiatives.

Brian caught my attention when he told me about a new insurance fund concept they were working on for the ranchers of Paradise Valley. He explained that ranchers in Paradise Valley, directly North of Yellowstone National Park, were having issues with cattle getting brucellosis from the wintering elk herd. Brucellosis can be financially devastating to a ranching operation and was one of the core issues troubling the ranching community when surveyed by PERC.

The question for PERC became, How do we create a free-market solution to solve this problem? This is when the Paradise Valley Brucellosis Compensation Fund was created. When Brian outlined the concept to me, that would allow for the ranchers’ cattle and wintering elk to coexist, I told him on the spot I wanted to support this innovative solution. In an era of extreme government controlled environmentalism, it is crucial to highlight private market solutions for conservation. This is a great opportunity to do so!

It is important to respect the opinions of farmers and ranchers since they understand the greater natural ecosystem. They are the nation’s greatest conservationists and stewards of our precious land and resources. There has been an onslaught of attacks against ranchers and farmers from the environmental community; thus, it is crucial to illustrate examples of why this community is not at odds with conservation. In fact, their preservation of large areas of land is crucial task in maintaining a healthy ecosystem (a task not easily accomplished in a nation that is fixated on urban sprawl).

Simply put, farming, ranching, and conservation are not at odds with each other and, if approached properly, can flourish together. Growing up in a small ranching community, I saw firsthand the role that ranchers and farmers play in conservation. As stewards of the land, I have seen the government fail time and time again.

When my wife and I were exploring new places to live, what really struck us about Montana was its deeply rooted culture of land preservation. Montana remains home to a multitude of large multithousand-acre ranches; many are in conservation easements to ensure they stay protected for years to come. We immediately resonated with this culture and were relieved to see a western state that was pushing back against uncontrolled growth.

One of the major contributing factors to why we moved from Nevada to Montana was the quality of hunting and fishing. As a hunter and angler, I value healthy populations of wild game and fish. Eating wild game is at the center of our family’s diet. The ability to hunt and procure our own food is extremely important to us. I want my son to have the same opportunities to hunt and fish as I did growing up; I do not believe this opportunity is still viable in Nevada, the state where I was born and raised.

Montana boasts some of the healthiest big game, waterfowl, and fish populations in the United States. I believe this to be a testament of the conservation work being done by ranchers and farmers. When comparing Montana to other western states there is a stark difference in the ratio of private to public land.

For example, 80 percent of Nevada’s land is owned by government agencies compared to Montana’s 35 percent. Less public land certainly limits access, but I believe it promotes a healthier ecosystem. Privately owned land, specifically large ranches and farms, is managed carefully to drive efficient returns from renewable resources like crops, cattle, and wild game.

In contrast, government-run public lands do not have the same incentives or pricing data as do private lands which typically leads to misallocation and mismanagement of renewable and natural resources. As a Nevada resident, I could not draw a quality tag to hunt and procure food each year for my family. I attribute this to the years of mismanagement of the animal resources by the government. In Montana, I can buy over the counter tags and hunt throughout the state. Thanks to the conservation efforts in Montana, my freezer is full of wild game for my family.

This argument highlights Ludwig von Mises’s economic calculation problem as described in his 1920 essay, “Economic Calculation in the Socialist Commonwealth.” A society devoid of private property and market pricing is also devoid of economic calculation (profit and loss) and will misallocate resources. The terrible twentieth-century food shortages inherent in socialist countries emphasize this point. Economists at PERC understand this and use working case studies as proof. Even beyond PERC, there are other private organizations in Montana that are rethinking free-market conservation.

One such company is Land Trust. Founded in Bozeman, Montana, it connects landowners with outdoor recreationalists seeking land access through an easy-to-use online marketplace. Think Airbnb for the outdoor recreation community. One can go online to book a day of bird watching, fishing, foraging, or hunting on several private ranches and farms.

The customer experience is remarkable since this is a true private marketplace for outdoor recreationalists and landowners. The timing could not be better to help alleviate the pressure between public land advocates and private landowners. Most importantly, what will come out of the Land Trust platform is price discovery. The public land access argument is, by this model, demonstrated in a positive way. Years from now, I am confident that we will have the market data to prove our resources for outdoor recreation access and conservation are better spent in the free market.

Quality and access will start to converge thanks to platforms like Land Trust and funds like the Paradise Valley Brucellosis Compensation Fund. Organizations like PERC and Land Trust are rethinking how we approach conservation in the free market. These are radical organizations in a world where legislation like the Green New Deal is presented as conservation. Legislation like the Green New Deal puts conservation in the hands of those furthest removed from the environment they are claiming to protect. Even more troubling is that their concept of conservation is based on excess spending without any economic calculation. This flavor of conservation will only lead to further misallocation of resources (which is ironically the very antithesis of conservation).

I am proud to be a Montanan and live alongside the ranchers and farmers protecting this amazing land. I will continue to work alongside groups like PERC and Land Trust to help foster free-market conservation so my son will have the same opportunities I had to hunt, fish, and explore untouched wilderness—something I am unwilling to trust or leave in the hands of the state!

While the average person thinks economics begins with Adam Smith and his Wealth of Nations, readers of the Mises Wire know that the story goes back much further than that. Members of the Austrian school commonly describe their earliest intellectual predecessors, the late Scholastics, as “proto-Austrians.” In Jesús Huerta de Soto’s chapter on Juan de Mariana in 15 Great Austrian Economists, Huerta de Soto writes of ten major contributions to what would go on to be important Austrian school concepts:

The subjective theory of valueThe proper relationship between prices and costsThe dynamic nature of the market and the impossibility of the model of equilibriumThe dynamic concept of competition understood as a process of rivalry among sellersThe rediscovery of the time-preference principleThe distorting influence of the inflationary growth of money on pricesThe negative economic effects of fractional reserve bankingThat bank deposits form part of the monetary supplyThe impossibility of organizing society by coercive commandsThe tradition that any unjustified intervention on the market by the state violates natural law

In fact, Huerta de Soto goes on to further say that

the greatest merit of Carl Menger was to rediscover and take up this continental Catholic tradition of Spanish scholastic thought that was almost forgotten and cut short as a consequence of the black legend against Spain and the negative influence on the history of economic thought of Adam Smith and his followers of the British Classical School.

However, these contributions were not the only discoveries that Menger’s founding of the Austrian school seems to echo. Murray Rothbard writes, in An Austrian Perspective on The History of Economic Thought, about another brilliant Catholic who preceded Juan de Mariana by about three centuries, St. Thomas Aquinas. Rothbard describes Aquinas as “the towering intellect of the High Middle Ages, the man who built on the philosophical system of Aristotle, on the concept of natural law, and one Christian theology to forge ‘Thomism,’ a mighty synthesis of philosophy, theology, and the sciences of man.”

Despite Aquinas’s brilliant natural law philosophy, Rothbard focuses more on his economic contributions regarding the just price, usury, and money (on which Rothbard has both positive and negative things to say). Ultimately, Rothbard considers Aquinas to be a supremely important influence. However, one point that Rothbard does not address is that Aquinas and Menger seem to share, whether intentionally or unintentionally, the definition of a good. Menger defines a good as something satisfying the four following prerequisites:

It satisfies a human needIt has such properties as to render the thing capable of being brought into a causal connection with the satisfaction of this needThere is human knowledge of this causal connectionThe command of the thing is sufficient to direct it to the satisfaction of the need

The definition of a good was the fundamental point of Menger’s Principles of Economics. However, much like with the work of the proto-Austrians of the school of Salamanca, Menger’s definition is largely reminiscent of what St. Thomas Aquinas wrote in the 1200s in A Shorter Summa:

We should observe that hope presupposes desire. Before a thing can be hoped for, it must first be desired. . . . Secondly, we must judge that what is hoped for is possible to obtain; hope includes this factor over and above desire. True a man can desire things he does not believe he is able to attain; but he cannot cherish hope with regard to such objects. Thirdly, hope necessarily implies that the good hoped for is hard to get: trifles are the object of contempt rather than of hope.

Menger’s first criteria of a good directly correlates to Aquinas’s first criteria of hope. Menger insists a good must have a human need, whereas Aquinas states (somewhat synonymously) that a hope is something that is desired. Next, Aquinas explains that man must believe he can attain the thing for which he hopes. This combines parts two and three of Menger’s definition. Similarly, Ludwig von Mises explains that the belief in a connection between the good and the need is more important than the outright knowledge of it.

Menger’s last point, concerning the “command of the thing,” does not necessarily relate to Aquinas’s observation that the good should be “hard to get.” However, Aquinas’s last point does relate to what Mises explains makes something a specifically economic good, scarcity. Scarcity is the very thing Aquinas is describing. Everything Aquinas says regarding hope is directly relevant to the later Austrian definition of a good.

These Catholic theorists made such impressive proto-Austrian statements, uninformed by economics, because, as Tom Woods explains in The Church and the Market,

One of the characteristic features of Catholic thought over the centuries has been its emphasis on reason. Man’s mind, according to this tradition, is capable of apprehending a world of order that exists outside itself. Man is able to abstract “universals” from the myriad objects and sense data that appear to him and thus bring order to the chaos of mere data above which mere brutes can never ascend.

The school of Salamanca, St. Thomas Aquinas, and Carl Menger have one thing in common; they use reason to try to comprehend objective reality. As a result, even though some approach theology and some approach economics, these brilliant individuals come to the same conclusions because they are all taking steps toward understanding objective reality.

Introduction: Division, friction and polarization have been on the rise in the West for at least a decade, but the escalation we saw during the “covid years” was especially worrying. Over the last year, this “worry” has become a truly pressing concern, even a real emergency one might argue, as inflationary pressures and an actual war were added to the mix of political and social tensions.  

Going into 2023, there are many reasons for responsible investors and for hardworking savers to adopt a cautious, bearish outlook. If anything, it’s hard to tell what to be concerned about the most and what to prepare for first: an escalation to the Ukraine-Russia war? Inflation persisting or even reaching new highs? Fuel and heating costs exploding even further? Growing government overreach and suppression of individual liberties and financial sovereignty? 

In an effort to answer questions like these, that are keeping countless Americans and Europeans up at night, I turned to Jeff Deist, President of the Mises Institute in Alabama. Jeff has been one of the most impressive thinkers and speakers that I have personally encountered, and I’ve always found his clarity of thought particularly enlightening, but also very helpful in this day and age. After all, the ability to plainly and honestly communicate a great idea is just as important as the ability to conceive it – especially when it can be communicated to the public and change some open minds in the process, just like the Mises Institute has been doing for four decades. 

Claudio Grass (CG): After the extreme trespasses, power abuses and irrational policies and U-turns we saw during the pandemic, many citizens hoped that 2022 would prove to be the year of “normalization”. What we got instead was a war, a fuel and food crisis, and a world more divided than any time before in recent memory. What was, in your estimation, the most worrying development we saw in 2022?

Jeff Deist (JD): 2022 may be remembered as the year we fully understood how elites and the political class never intend to allow a return to “normal.” The covid flu virus created the excuse for lockdowns, controls, and spying; and as Robert Higgs explained, the “Ratchet Effect” means crisis measures don’t go away when the crisis ends. 

Covid will be the excuse for attempts to impose a whole new battery of state mandates in areas of health (vaccines, masks, testing), business (closures), money (central bank digital currencies, capital controls), and movement (quarantines, travel restrictions). It’s up to us in the fight to restore normalcy and decency; the politicians will always go in the other direction.

CG: We both warned for a long time that there would be a very high price to pay for the more-than-a-decade-long monetary and fiscal policies of the Fed and most of its peers. Why do you think it took so long for inflation to make the comeback we’re suffering though today? What triggered it and why now?

JD: The current price inflation engulfing the US and other western nations results more from fiscal stimulus in 2020 and 2021 than monetary policy. In America alone, national politicians pumped more than $6 trillion into the domestic economy in the form of direct payments—subsidies—to state and local governments, preferred industries (insurance, airlines), businesses (payroll “loans”), and individuals in the form of stimulus checks.

All this new money was created even as Covid lockdowns dramatically reduced the production of goods and services and disrupted global supply chains. So unlike monetary stimulus, where central banks push interest rates down and buy government bonds from commercial banks, the price inflation we are suffering today is directly tied to fiscal stimulus. It’s a simple matter of more money chasing fewer goods and services. Paying people to stay home and not work was a recipe for disaster.

CG: After numerous unsuccessful attempts to simply deny its existence, central bankers were forced to acknowledge that inflation is indeed a problem, but still, quite unsurprisingly, nobody seems too keen to take any responsibility for it. Together with politicians, they simply blame Putin for it and pretend that the reckless “print, borrow and spend” approach of the past years had nothing to do with it. Given the relatively low levels of financial literacy among the general public, do you think most voters and taxpayers believe this narrative?

JD: The question is not only whether average people still believe in the technical competence of central bankers to “manage” the economy, but whether they still believe central bankers even intend to help average people. Increasingly the answer to both appears to be “No!” 

We are fewer than 15 years removed from the last economic crisis of 2008, so the idea that central banks prevent crises and crashes is hardly supported by the evidence. Of course, the poorest people suffer most from inflation, as a larger portion of their income for basics—food, utilities, transport, and rent. So, I do think average people sense something is deeply wrong with the financial and monetary system, even if they don’t understand the underlying technical issues.  

CG: Apart from the thousands of human lives the Ukraine war has already claimed or uprooted and the inestimable damage to private and public property, there was another causality: Whatever was left of the legal protections for private property or of the free market in Europe vanished seemingly overnight. We saw gas and nuclear power companies nationalized, unprecedented interventionism in the oil and gas market and redistribution policies, fining energy companies for being profitable to pay for “inflation checks” to the public. Do you see a similar trend in the US?

JD: The US has been more insulated from the energy shocks cause by sanctions against Russia simply because we have vast amounts of domestic oil and natural gas. But we lack sufficient refining capacity to make full use of our oil, due to environmentalist pressure. We also lack sufficient nuclear capacity for a country of 330 million people.

So yes, I think events in Ukraine will advance the narrative of the “Green New Deal,” which effectively nationalizes energy policy to promote so-called renewable fuels while banning—or regulating into oblivion—fossil fuels. This is all a pipe dream, of course, as coal, oil, and natural gas still account for more than 80% of our energy use. And we are many decades away from having the grid capacity for widespread use of electric vehicles, even if you ignore the terrible issues of lithium mining and battery disposal. 

Unless we are prepared to suffer a significant loss of material living standards, politicians in the West better stop fantasizing about green energy and start getting serious about the real market for reliable and cheap fossil fuels. Let’s hope and pray this winter does not result in the freezing deaths of people in Ukraine or Europe due to energy shortage.

CG: Speaking of the US, what’s your assessment of the fiscal and regulatory policies adopted since Joe Biden took office? Do you think there’s anything his administration could have done to avert the current inflationary spiral or was it always going to be inevitable, after so many years in the making?

JD: Biden certainly is responsible for the increase spending under his administration, which has enormous inflationary consequences. But most of the mischief in our economy was created by fiscal and monetary policies enacted while he was a cronyist US Senator for many decades. In that sense his Senate record is far worse than his presidential record. He is a buffoon, and easily led, which means he is not capable of challenging the “print, borrow, and spend” approach you mentioned. But I hope people understand Biden is a symptom of a much deeper problem, which is a hopelessly corrupt system with all the wrong incentives.

CG: Focusing on the sociopolitical situation, at least from an outsider perspective, we’re certainly seeing less outrage and controversy reflected in the international press compared to when Trump was in the Oval Office. Does that mean that the “wounds have healed” and that Americans are actually more united today or is the rift still widening, just more quietly?

JD: From my perspective the rift has widened. Biden’s narrow victory is viewed by the Left as a mandate to punish and vanquish the Deplorables, especially in rural areas. That’s the nature of politics, which is a form of proto-violence. Markets and civil society are win-win institutions, government and politics are zero-sum. So, unless and until we reduce the importance of political outcomes—unless and until we make life less political—we should expect division to grow.

CG: Both in US and in Europe, there is well-documented and growing mistrust of the media, social- and legacy organizations alike. My own hope had been, especially after the pandemic, that the obscene amount of bias would cause more and more people to do their own research and to “educate themselves”. Have you noticed such a shift in the US, perhaps reflected in a heightened interest in the educational content and programs that the Mises Institute offers? 

JD: Absolutely. The digital age provides us the ability to seek out and find voices of reason and peace amidst the white noise of mainstream media. I hate to think it takes a real calamity to wake people up, but perhaps this is human nature. The more worried people become about the economy and their future, the more they seek out alternative sources of news and information. The Mises Institute works to be an alternative source for economic news and education.

CG: Another trend we have in common is the “green agenda”. Even as the present crisis made it abundantly clear that the energy transition in Europe was catastrophically premature, bringing about the “cold, dark winter” that millions of citizens are now facing, there is still extreme pressure for more “green” policies, including a war on farmers at a time of unprecedented food price increases. Is that something you expect to see continue in the months and years to come and if so, what’s the impact you expect to see?

JD: Food and energy crises certainly are possible. In keeping with the “new normal,” elites will use such crises to increase their own power and force us to suffer for problems they caused. We know, because they tell us plainly, their plans to have us stop using fossil fuels, stop traveling so much, stop eating meat, and stop owning homes. They are quite explicit about this. 

The fastest and most effective way to achieve this is to make houses, gasoline, and meat so expensive only the very rich can afford them. We already see consolidation of home ownership by private equity firms, for example, to create a nation of renters in the US. We see billionaires like Bill Gates investing in fake meat substitutes. We see recipes in gourmet magazines for dishes featuring bugs! 

None of this is normal or natural, but must be imposed by incentives, either positive or negative. If we hope to maintain any personal or family sovereignty in the coming decades, we have to recognize and resist this new program of imposed austerity.

CG: What’s your outlook for the US economy in 2023? What are the main threats that worry you the most and what would be your advice for responsible savers that seek to protect all they’ve worked for from their government’s incompetence or intentional abuses?

JD: Biden and company will face an increasingly tough economy, but given the Democrat’s tepid success in the midterm elections I suspect the administration will simply double down on fake statements about how well the country is doing. Politics is contra-reality, so by definition Biden cannot accept or admit what’s really going on.

I predict the US Fed will “pivot” in 2023 on interest rate hikes, meaning they will revert to their usual (true) status of worrying more about equity and bond markets than consumers and inflation.  

Inflation will remain will us, higher than admitted by government statistics, and will become a permanent feature of the 2020s across the West. Government spending and deficits will continue to grow. As a result, it will be a very trying decade for savers! Gold and silver, commodities, and bitcoin are the obvious suggestions for those looking to protect themselves from devaluation, but for a variety of reasons the US dollar will remain strong against other currencies. And of course, the most important thing is to “harden” yourself against uncertainty by improving your skills and practicing self-education.

[This interview first appeared here at ClaudioGrass.ch.