Federal underreporting of inflation doesn’t mean it’s not here—and much more is on the way
A massive inflationary storm is on its way in this country. It’s bad now, but it’s only going to worsen sooner than later.
Why would this be?
There are several factors, but the biggest factor is the war. Not the war in Ukraine, but rather the war against the dollar. There are many moving pieces, but the key point is that the world is moving away from the dollar.
In fact, there’s a global war against the U.S. dollar. There are a variety of reasons for this.
A Debt-Laden Dollar Means Weakness
For one, the U.S. national debt is simply unsupportable. Since taking office, the Biden administration has added more than $6 trillion to the balance sheet in liabilities. That alone has hurt the credibility of the United States as an economic power and the dollar as a viable currency in the future.
A little context helps explain what’s happening.
A currency can be measured by the strength or value of the commodity that backs it, such as gold or oil. But it can also be measured by the strength of its issuer’s economy or, as is the case at this time, the currency issuer’s ability to impose its will on others.
As a fading hegemonic power, the United States has passed through two of these phases and is now in the last one.
Leaving the Gold Standard for Oil Standard
Recall that the United States left the gold standard in 1971. Market disruptions followed because without an anchor reserve currency based on the value of a tangible commodity, it’s difficult to establish pricing for goods and services on the international market.
The linking of the dollar to oil in the mid-1970s solved that problem. The world’s oil producers and exporters cartel (OPEC), led by Saudi Arabia, agreed only to sell oil in the global market for U.S. dollars. What’s more, the Saudis also agreed to store their surplus revenue dollars, or “petrodollars,” in U.S. government bonds.
By James Gorrie
