Thread by @mtmalinen

The four unpleasant means to get #inflation under control:

1) Keep rising rates.
2) Getting rid of all (useless) Covid restrictions + NO more stimulus.
3) Peace in #Ukraine .
4) Running down the global balance sheet of #centralbanks .
(+ A revolution?)

🧵 1/15

#inflation = excess (monetary) demand over supply.

You need to get demand down and/or supply up to get price pressures under control.

Current situation is an (insane) combo of stimulus and demand destruction. We, e.g., should do everything to grow energy production. 2/

We are at a situation, where #inflation expectations are becoming a problem. Firms are rising prices and workers demand higher salaries in expactation of fast inflation. 👉 The worst situation.

We are also entering the second leg of #EnergyCrisis . 3/
mtmalinen.substack.com/p/winter-is-he…

In this situation only drastic measures will be effective. ☝️

Effectively, you need to kill the "excess" demand. 😖

This means rising rates ABOVE or very close to the current rate of #inflation . But, financial system is likely to crumble way before. 4/
mtmalinen.substack.com/p/global-liqui…

Unfortunately, this is what we may need. 😱

13 years of constant monetary meddlind by #centralbanks has created a massively bloated and fragile global #economy .

Quite simply, something has to "give". 5/
gnseconomics.com/2020/10/08/the…

We also need a peace in #Ukraine and lifting most of the sanctions, asap, to stave off global energy, food, primary energy, banking and sovereign debt crises.

A truce should be achieved before the possible (likely) winter offensive by #Russia . 6/
mtmalinen.substack.com/p/the-russo-uk…

After such an event, the security (peace) structure of #Europe would be in ruins. That has never been a good thing for the world. ☝️ 7/

I've been explaining, over and over, how the asset purchase (QE) programs are a form of central bank credit. So have got it, others still not. 🤷

Still, that's a fact and all CB credit is highly inflationary. 8/

https://twitter.com/mtmalinen/status/1597147668526280704?t=1z7nEUAiAeO-9wGB9pFDFg&s=19

This is because it truly is #money "out of thin air".

When banks create money (credit), it's a business transaction, but when #centralbanks do it, it's manipulation of the financial and monetary system.

This difference is crucial. ☝️ 9/

So, we need to get the global balance sheet of #centralbanks down.

But again, the global financial system is unlikely to be able to cope with that. 🤦

Yet, we absolutely need to do it. 🥶
10/
mtmalinen.substack.com/p/into-the-col…

#inflation checks are probably the stupidest idea in the current situation. 🤦

They will just keep demand artificially high sustaining #inflation pressures.

You absolutely CANNOT fix over-demand issue by increasing demand! 😡 🤦 11/

Situation is so dire, because we have let authorities and politicians to make an utter mess of things. We don't want to "face the music".

Central banks have corrupted their original purpose and European leaders have sleep-walked us into yet another war in our continent. 12/

I do fear what's in store for our continent.

#Europe has become a mockery of all it should represent (at least since the French revolution).

We should be the beacon of #freedom and #Peace but, after just three years, our ideals lay in ruins, again. 😢 13/

It's quite unfathomable how our "leaders" have been able to pull this off. 🤦🤬

Can we trust them to fix our (and the world's) problems? I am not so sure. 🤷

Maybe it would be a good time for yet another period of uprising in #Europe ? 🤔
14/

In any case, drastic actions are needed to turn our economies around and to sustain our living standards. ☝️

Otherwise, we are in major risk of destroying both our future and the future of our children.
/End
mtmalinen.substack.com/p/enter-the-pe…