The thing you have to do before you talk about what is happening now, in my opinion, is to go back and really start at the end of the great financial crisis. The reason for this is that there were a lot of people coming out of the gfc who confused what the US government and some European governments were doing at the time with the risk of a huge financial contagion, and the US stepped in and defended their balance as a result.
In any case, several governments participated in it, including Japan, and there was his body of pseudoscientific economists who created the modern monetary theory, which essentially asserted that you could keep printing money and injecting it into the economy to smooth things over and actually promote long-term growth. As it turns out, a number of government officials bought into this theory, and if you fast-forward to 2022, you'll see that it worked.
When we talk about a recession or inflation, we haven't just been hiding the true supply and demand in the last six or eight months; we've been doing it since 2008. It's just that it's been building up in the system, so one of the things to remember is that we haven't just been hiding the true supply and demand in the last six or eight months when we've been talking about a recession or inflation.
Finding equilibrium is what's intended That is the background, and if you think about taking $30 trillion out of the global economy, you know you're talking about almost I think it's 85 trillion is the world GDP so like you know it's almost half of an ent. This is because without government sloshing money around trying to prop up things that should not be propped up or buying votes or all the griffs that these folks have engaged in in the last decade and a half have to get undone.
You have to view asset prices today as a microcosm of a much larger trend that has to be about fake money pushing asset prices up and then taking all that fake money out and finding out what the real price of something is, and I just don't think that takes long. So it seems like the beginning of something that's going to be long and drawn out and that's separate from what they were in a recession or not that's just the bear market that were right.
I don't know if you guys saw but there was an article today Janet Yellen is traveling around essentially persuading people to not include Russian oil from a bunch of immoral sources. I just think that's not how it's probably going to be it's going to take you know 2436 months that may mean the bottom doesn't happen for other 18 months so I think it's a word for a lot of choppy market action we may not be negotiating it'
We push for all these fines based on guidelines on the five-year high. Then, we basically go around Europe and say that while we kind of want to fight this proxy war and at the same time we want to try to fix inflation, we didn't mean to cause this, and what's happening is completely disorganized, but here's the thing: I think we also have to be sensitive to the fact that the Fed operates on a certain class of data, and that data in the 21st century is pretty prettty.
There was an article, I believe in the New York Times, that really walked through how CPI is calculated and it's a bunch of people who work for the government who walk around with iPads building relationships with local businesses and all these random places all over the country and asking them to chit chat chit chat for 15 minutes and do these surveys now you would have thought that in 2023 or 2022 what the government would have said to visa MasterCard American Express.
Since inflation only happens when a good or a service is exchanged for money, all payment rails, banks, and Stripe are required to send me a feed in the manner described below so that I can actually have an absolute precise understanding of inflation. Instead, we use a random sampling method. If you read this article, your main takeaway will be that inflation only happens when a good or a service is exchanged for money. Oh my God, it's so flimsy and drives a huge hammer that we used to try to control. See you on my next episode..subscribers kindly.
