[Skybird]

The current explosion of inflationrates is not only coming from any "monetary policy", but also from a wanted productivity destruction that is immensely increasing the real costs of the entire economy. Ideology further demands to constantly increase costs for vital factors that define the existential fundament of millions and millions of citizens in our country. These wanted destructions are not even given up when being confronted by additional external crisis. Things get bend until they must break. So nobody complain please when at the end an ear-shattering knacking sound knocks your consciousness out - the bang and the subsequent numbness are only logical.


Gerd Held writes for AdG:


Among the most elementary things that determine the stability of a country and the cohesion of its society are prices. Their steadiness is the foundation on which people's trust, diligence and staying power are built. If a radical change occurs here, with the general price level suddenly rising sharply, this leads to a profound shaking of a country's economic, governmental and cultural architecture. Other crises, which just a moment ago seemed to be the greatest threat, then suddenly seem strangely distant. A wave of inflation touches people much more closely, it intervenes much more directly in their everyday lives. And it has a much broader impact. It devalues not only money, but also labor, the value added by companies, and the performance of state infrastructures. And this is especially true if the new price level is expected to remain in perpetuity.

All this applies to the wave of inflation that has gradually built up over the past few years and is now sweeping across many countries - including highly developed countries - with great force. It has not yet reached its peak. Many price increases have already occurred in raw materials and intermediate products, but have not yet been reflected in the prices of the final products. And already at this stage, there is no element visible that could eventually bring prices back to their old levels. The current wave of inflation is a profound and permanent change. It is as if the whole country is being moved to "worse ground" all at once.

There are numerous weasel words in our time that mean everything and nothing through thoughtless use. One such weasel word is "inflation," which is used to describe the current wave of inflation. This is intended to cover any increase in the price of goods - without providing any information about what this increase in price is based on.

Thus, an important distinction disappears: On the one hand, there is the price increase which is due to excessive money multiplication. In other words, it is due to a change in the relationship between money and goods. Undoubtedly, this is an element in the current wave of inflation, caused by the cheap money policy of the central banks. But on the other hand, a wave of inflation can also be rooted in changes in the real economy - that is, in goods and the conditions of their production. When conditions deteriorate, costs rise, and this is reflected in prices. When they improve, prices fall. In either direction, the changes can be very large, and they can cut across an entire economy. A price revolution based on better production conditions makes economic life easier. But a price revolution based on worsening production conditions makes it more difficult and can go so far as to bankrupt businesses, entire industries and infrastructures. Certain goods then not only become extremely expensive, but are no longer available at all. A price revolution is then the harbinger of a loss of substance in the real economy. Such a devastating price revolution is taking place in our present time.

The most conspicuous part of the current wave of inflation is energy prices. It is already foreseeable that households, businesses and government institutions will see their energy costs double or even triple this year. Energy costs affect all sectors and industries - and all stages of the value creation process. Energy is needed as drive energy in means of transport and mechanical machines, as process energy in chemical material conversion and preservation (food), as household energy for heating and cooking, as lighting energy in private and public spaces. And digitization has opened up a whole new field of medial energy use and increased the consumption of energy yet again. Thus, an increase in the cost of energy is affecting the national economy and government activity across the board.


Quite obviously, the sharp rise in energy prices is not (or only to a small extent) based on demonetization through "cheap money" and an inflation of the money supply in circulation. No, it is based on fundamental changes in the conditions of energy production. The conditions are made more difficult. But what is the aggravation? Has a sudden doom befallen the earth and humanity, causing energy resources to become less available or production facilities to fail? Or does the deterioration result from certain decisions? Is it consciously and willingly accepted or even actively pursued? The latter is apparently the case when one thinks of the "climate rescue," which is justified with the thesis of a "climate crisis" that is supposed to be so dangerous that it justifies the elimination of essential energy sources and a drastic increase in the price of energy. And now, in the Ukraine crisis, "Putin's Russia" is said to be such a world-threatening enemy that one of the largest energy countries on earth is to be eliminated. In view of such justifications, it becomes clear that we are dealing with a deep intervention in the production conditions of energy that have been developed over decades and centuries. With an intervention that significantly lowers the productivity of energy production and distribution. And there is no element visible that could allow a return to the old price level in this set framework.

It is clear that such a deterioration of real conditions cannot be countered by changes in the quantity or value of money. A policy of cheap money can at most mask and conceal the deterioration for a time. But it does not reach the fundamental problem. To reach it, one has to go down into the "engine room" of a country, into its sphere of production, where there are hard physical-technical realities. One must clarify what the new hardness of conditions is that drives costs.

A good has a price only if it is scarce. Goods that are infinitely available have no price. Scarcity forms the - often unspoken - background of the movements of supply and demand. Scarcity initially appears as a conflict between natural givens and human needs. But there is a factor that mitigates this first, raw scarcity and relaxes its constraints: that factor is civilization. A civilization can greatly expand (with labor, knowledge, capital, infrastructures...) the original narrowness of the world. These margins are the material basis of our freedom. But this mitigating factor is also limited. There is a scarcity of labor and labor resources, a civilizational scarcity. However, this scarcity is considerably milder than the scarcity in a world without material-technical civilization. This sounds very sober, but in the end it is about great, precious achievements. It is about fundamental goods on which people's existence depends - including their motivation for work and commitment. It is a question of the prosperity and decline of cities and landscapes, of entire countries and societies. The significance of a level of civilization that has been reached becomes suddenly visible in devastating price revolutions: All of a sudden, what was tacitly believed to be secure is shaken.

Now the price we have to pay for a scenario in which we are exposed to maximum threats and there can only be a maximum rescue policy with drastic interventions becomes visible. We have been put in this scenario with the proclamation of ever new "major crises." With it, there are no more trade-offs in politics, but only absolute priorities and imperatives. In the case of the "climate crisis," a substantial portion of energy production is to be first made more expensive and then shut down in order to prevent the "planet from overheating." This is considered an absolute imperative, more important than any energy productivity. In the case of the "Ukraine crisis," the elimination of fossil fuels is to be accelerated even further - even though no viable alternative is available. All the same, compared to the absolutely set external danger, the achievements of modern energy production are secondary. They must be sacrificed. This principle was already followed in the German decision to phase out nuclear energy - after the Fukushima accident. There was no concrete danger connection between Fukushima and the operation of German nuclear power plants.

The current wave of energy prices is the logical consequence of a policy that works with extreme threat scenarios. Three "greatest possible dangers" are now present: a nuclear power plant catastrophe, an imminent overheating of the planet, a threat of world war by a "mad" dictator. But the extremism of the conjured dangers has little to do with the facts and much to do with feelings and assumptions. The maximum dangers thus generated are not amenable to objective consideration.

Thus, every policy of absolute imperatives also has its turning point: The more its devastating consequences for the national economy and civilization become apparent, the inclination to weigh things up after all grows: Are the sacrifices and losses really in reasonable proportion to the dangers? Thus, once again, the realization will grow that the wave of inflation is the result of a completely one-sided perception and prioritization. A case of political extremism.

In such a situation, counterforces quite inevitably develop. With each new price surge and with each new industry that is hit by it, more critical questions arise. Where will the ever-increasing threat scenarios lead? How did we get on this path in the first place? And how did we get to the point where we are ruining our industries that once worked so well and gave Europe such an important foothold?

So we could be in for an exciting contest. Of course, there will be no less attempts to get people to accept growing costs and sacrifices with scare stories and rosy rescue tales. You can tell by the way political statements and news stories are now trying hard to keep the public in suspense with a daily show of threats and rescues, of bad and good. In contrast, the camp of deliberative reason does not have to participate in such an escalating race. It does not have to forcibly push anything forward or overplay anything. It can trust that the point will come when the politics of absolute imperatives becomes increasingly hollow and at the same time has such serious consequences that more and more people will switch to the camp of the deliberative.

The Frankfurter Allgemeine Zeitung of April 13 reports on the results of the monthly representative sentiment survey conducted by the Allensbach Institute for Public Opinion Research for the FAZ. The March survey focuses in particular on energy policy issues against the background of the wave of inflation. This issue has now become the most important topic of concern for Germans. The survey shows how much skepticism has grown as to whether fossil fuels can be replaced in the foreseeable future by alternative energy sources such as solar and wind. 86 percent of respondents say there will be difficulties with energy supply in the next few years. In 2019, that figure had been just 26 percent. Now, only 26 percent believe that the supply could be completely switched to alternative energies by 2050. There has been a real change of mood in the assessment of the role of nuclear energy: as recently as February 2022, 42 percent of respondents were in favor of shutting down nuclear power plants as planned. 35 percent were in favor of continued operation. In March 2022, the votes in favor of continued operation had risen to 57 percent of those surveyed, while only 25 percent wanted to stay with shutdown. And the Ukraine crisis? 57 percent of respondents favored continuing to buy oil and gas from Russia, while only 30 percent were in favor of an immediate embargo.

Translated with www.DeepL.com/Translator (free version)