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Geopolítica e Política

Lusa - Lusística - Mundial

Geopolítica e Política

Lusa - Lusística - Mundial

The Punctured Bag and the Firehose

Dmitry Orlov on the 2023 Financial Crisis, March 21, 2023 at 11:23

23.03.23 | Álvaro Aragão Athayde

Bag of Money with Holes


Dmitry Orlov
C l u b O r l o v | ideas to blow your mind
March 21, 2023 at 11:23 | Has readers’ comments | For subscribers only | Here


Few people are able to see through the smoke and grasp the sinister machinations of the Federal Reserve, the US Treasury and their affiliate the European Central Bank. It’s possible to endlessly pour over news articles, faithfully read all of the Fed’s reports and maybe even take night classes in macroeconomics and finance, and still not have much of an intuitive grasp of what’s happening. Statistics don’t so much lie as just sit there and let you stare at them blankly without a clue as to what all of it really means.

And yet once in a while a statistic catches my eye that describes the situation quite eloquently. Here is one: 83% of all the US dollars that now exist in the world have been summoned into existence during just the past 22 months; since May 2021, that is. Four out of every five dollars in existence has been conjured up pretty much yesterday in historical terms.

Did the US, all of the participants in the dollar system, grow 83% richer? No, quite the opposite! The population of the US is rather distressed, with many people either living paycheck to paycheck or failing to make ends meet altogether. Other Western countries are in even sadder shape, with protests and riots erupting here and there and everywhere.

Was there 400% inflation, forcing the monetary authorities to issue new cash just to cover all of their member governments’ various obligations that are, in some way, indexed to inflation? No, in all of the West inflation is still well under 20%, with Poland, at 18.4% getting close.
With so much loose cash sloshing around, are bankers chasing their clients down the street and attempting to stuff their pockets full of money just to get rid of the stuff? No, in fact, there is a severe liquidity problem — so severe that recently the Fed had to inject $300 billion of new liquidity into the banking system in a single week just to stabilize things for the time being.