While the Fed sits around and rearranges numbers, equations and definitions to try and couch what is obviously an ugly inflationary picture for the country, at least one company is giving it to people straight: PepsiCo.

The company reported earnings this morning, posting a 9% rise in its Q3 sales and offering up increased guidance as it keeps raising prices on both snacks and its flagship beverages.

The 12% increase it expects from full year organic revenue, noted by the Wall Street Journal this morning, comes at the hands of average prices rising an astonishing 17% from the year prior. The price hikes have also helped the company raise its profit outlook. It now expects per-share earnings growth of 10% for the year, the report notes.

The rise in prices has helped offset a “slight decline” in overall sales volume, the report says. This means that Pepsi is fighting the recession that the country is in with more inflation. 

It also is a stark reminder of what the real year-over-year cost hikes of everyday goods has been for everyday Americans, despite CPI continuing to hover in the high single digits. In addition to prices rising, consumers are also grappling with shrinkflation, wherein more expensive items come in packaging that contains less actual content than it used to. 

Companies like Pepsi have been passing along the rising cost of raw materials, transportation and labor, the report says, reminding us that food inflation in the U.S. is the highest it has been in 40 years.

Grocery prices were up 13.5% in August and this week we will get the latest CPI data. If Pepsi is a leading indicator, there doesn’t seem to be much to be optimistic about…

GOOD NEWS: PayPal cancels social credit score beta test And Florida Surgeon General warns against COVID death shots

Steve Bannon of warroom.org appeared on The Alex Jones Show Thursday to break down the dire state of the collapsing global economy and stress how vital the coming midterms actually are:

Don’t miss:

Rolling Stone Founder Backs Govt. Regulation of Free Speech

As natural gas and electricity prices soar, many European households turn to firewood, a move to offset higher energy costs as the heating season begins.

Rising demand for firewood is sending much of Europe back to the ‘medieval’ days of using stoves and fireplaces to heat homes. 

The sabotage of the Nord Stream pipeline system underneath the Baltic Sea from Russia to Germany sparked even more energy uncertainty among Germans as many brace for what could be the coldest and possibly even the darkest winter in a generation due to rising risks of power blackouts. 

On Friday, European Union leaders failed to agree on a price cap for NatGas as the energy crisis might worsen this winter as freezing weather could quickly draw down supplies from storage facilities and catapult prices even higher.

About 70% of Europeans use NatGas to heat their homes, and according to Bloomberg, some 40 million people are now burning wood to heat their homes. New demand for a heat source that’s been around for ages has doubled the price of wood pellets per ton to 600 euros in France. 

Bloomberg pointed out Europeans are “panic buying the world’s most basic fuel.” Demand is so high that Hungary banned exports of wood pellets, and Romania capped firewood prices through spring.

“It’s back to the old days when people wouldn’t have the whole house heated,” said Nic Snell, managing director at British wholesale firewood retailer Certainly Wood. He added firewood is in high demand. 

The boom for firewood has also meant stove demand is high. Gabriel Kakelugnar AB, a manufacturer of high-end tiled stoves, said orders had surged more than fourfold, and customers have to wait until March for delivery. 

Firewood has become a scarce commodity this heating season, forcing some households to burn anything they can find: 

“We are worried that people will just burn what they can get their hands on,” Roger Sedin, head of the air quality unit at the Swedish Environmental Protection Agency, said. 

In fact, this is true, Polish households have started to burn trash and coal as firewood supplies dwindle. 

The UK has finally come around to informing its citizens about power blackout risks. The country’s grid operator warned about the “significant risk” of NatGas shortage that could trigger three-hour power cuts this winter

Well before the heating season, we detailed in length about soaring demand for firewood. We noted in August that “Google Searches For “Firewood” In Germany Have Exploded” and even in July cited Deutsche Bank senior economist Eric Heymann who indicated a “substitution for gas” would be firewood. 

Europeans have to ask if soaring electricity bills and a cost-of-living crisis are worth supporting NATO’s proxy war in Ukraine via sanctions against Russia. People in Prague are already tired of Western sanctions that have devastated their economy and financial well-being. 

GOOD NEWS: PayPal cancels social credit score beta test And Florida Surgeon General warns against COVID death shots

On Monday, America’s third-largest union for workers in freight rail, which represents almost 12,000 railroad employees, rejected a temporary agreement arranged by the administration of US President Joe Biden to prevent a potentially crippling nationwide railroad strike, according to NBC News.

In September, trade unions and major US railway companies signed a preliminary agreement, which made it possible to remove the threat of a general railway strike, which could stop the movement of goods throughout the country and affect the supply of food and fuel both in the United States and abroad.

According to a statement from the Brotherhood of Maintenance of Way Employees, which is a division of the Teamsters Union – 56 percent of workers voted against the tentative agreement.

Rejecting the agreement may lead to a nationwide rail strike that would be devastating for the economy, according to US media.

The rail shutdown threatens to freeze nearly 30 percent of the US freight traffic and cost the US economy $2Bln a day, as well as trigger an increase in inflation, and a cascade of transport problems affecting energy, agriculture, manufacturing, healthcare and retail.

Earlier, Biden announced that a tentative deal had been reached between several unions and freight railway companies that would allow the industry to operate effectively as a vital part of the US economy.

The deal provides for a 24 percent increase of rail workers’ wages over the next five years, an improvement in their working conditions, and a cap on the cost that rail workers pay for healthcare.

The tentative agreement with the unions, which collectively represent approximately 120,000 rail workers, would avert a potential nationwide strike.

According to the Bureau of Labor Statistics, the number of railway workers in the United States has fallen from 600,000 in 1970 to about 150,000 in 2022 – a 75 percent decline.

GOOD NEWS: PayPal cancels social credit score beta test And Florida Surgeon General warns against COVID death shots

It’s easy to look back over the post-pandemic era and say the Federal Reserve stayed too loose for too long in the face of rising CPI.

For months, the central bank ignored the inflation problem, claiming it was transitory. But as Peter Schiff pointed out in a podcast, the loose money problem isn’t anything new. It’s been going on for decades.

You can trace the Fed’s inflationary monetary policy all the way back to 1998 and the Long-Term Capital Management bailout.

That’s when the Fed really started printing money. And then it printed even more money in advance of Y2K. And then even more money after the NASDAQ bubble popped in 2000. And even more money after the real estate bubble popped in 2008. So, it’s not just one year of excess money printing. The Fed has been too loose for almost 25 years, flooding the economy with cheap money.”

Wharton School of Business finance professor Jeremy Siegel was recently on CNBC arguing that if the Fed had simply started hiking interest rates and ended quantitative easing sooner, instead of claiming that inflation was transitory, we wouldn’t be having the inflation problem today.

That’s short-sighted. The seeds were sown years ago.

But why didn’t Federal Reserve Chairman Jerome Powell act sooner? Peter said it was because he didn’t want to create a problem by fighting inflation because, at the time, he could claim inflation wasn’t a problem.

They didn’t want to fight it in 2021 because it would have created a problem for the economy. Now, the inflation they didn’t want to fight because doing so would have created a problem has itself become the problem. And so, they’ve got a problem either way. They’re damned if they do, and they’re damned if they don’t. So, that’s why they’re fighting inflation now. But even if they had chosen to fight it earlier, before it got this out of hand, they still would have created a crisis. Because it’s not just being too loose for a year. Again, it’s 25 years of reckless money printing — of malinvestments and misallocations of resources. This is a gigantic credit bubble. We just added even more fuel to that bubble in the last year.”

Peter said there was no way around this. There wasn’t a “correct” decision the Fed could have made last year.

All [the Fedf] did was make the only decision that would allow them to postpone the pain for a little longer. They had no idea how much time they were buying by being that reckless. But they didn’t care. The name of the game for the Fed is always ‘don’t create a problem even if it solves a bigger problem.’ Wait for that bigger problem to become a crisis.”

Peter said he knew 2008 wasn’t the real crash. The reckless monetary policy in the response to the Great Recession simply papered things over and kicked the looming crisis down the road.

Well, the real crash is the one we’re headed for right now. And we were going to have that crash regardless of the mistakes the Fed made in 2021. We were going to have it because of all the mistakes it made — not just going back to 2008 — but going all the way back to 1998.”

I have said it many times in the past but I’ll say it here again: Stock markets are a trailing indicator of economic health, not a leading indicator.

Rising stock prices are not a signal of future economic stability and when stocks fall it’s usually after years of declines in other sectors of the financial system. Collapsing stocks are not the “cause” of an economic crisis, they are just a delayed symptom of a crisis that was always there.

Anyone who started investing after the crash of 2008 probably has zero concept of how markets are supposed to behave and what they represent to the rest of the economy. They have never seen stocks move freely without central bank interference and they have only witnessed brief glimpses of true price discovery.

With each new leg down in markets one can now predict every couple of months or so with relative certainty that investor sentiment will turn to assumptions that the Federal Reserve is going to leap in with new stimulus measures. This is not supposed to be normal, but they can’t really help it, they were trained over the past 14 years to expect QE like clockwork whenever markets took a dip of 10% or more. The problem is that conditions have changed dramatically in terms of credit conditions and price environment and it was all those trillions of QE dollars that ultimately created this mess.

Many alternative economists, myself included, saw this threat coming miles away and years ahead of time. In my article ‘The Economic End Game Continues’, published in 2017, I outlined the inevitable outcome of the global QE bonanza:

The changing of the Fed chair is absolutely meaningless as far as policy is concerned. Jerome Powell will continue the same exact initiatives as Yellen; stimulus will be removed, rates will be hiked and the balance sheet will be reduced, leaving the massive market bubble the Fed originally created vulnerable to implosion.

An observant person…might have noticed that central banks around the world seem to be acting in a coordinated fashion to remove stimulus support from markets and raise interest rates, cutting off supply lines of easy money that have long been a crutch for our crippled economy.”

The Fed supports markets through easy money that feeds stock buybacks, and it’s primarily buybacks that kept stocks alive for all these years. It should be noted that as indexes like the S&P 500 plunged 20% or more in in the first six months of 2022, buybacks also decreased by 21.8% in the same time period. That is to say, there seems to be a direct relationship between the level of stock buybacks and the number of companies participating vs the decline of stocks overall.

And why did buybacks decline? Because the Fed is raising interest rates and the easy money is disappearing.

If buybacks are the primary determinant of stock market prices, then the participation of individual investors is mostly meaningless. Stocks cannot sustain on the backs of regular investors because regular investors don’t have enough capital to keep markets afloat. Companies must continue to buy their own shares in order to artificially prop up prices, and they need cheap Fed money to do that. Stocks are therefore an illusion built only on the whims of the Fed.

And the reason for the Fed’s dramatic shift away from stimulus and into tightening? One could argue that it’s merely the natural end result of inflationary manipulation; that central banks like the Fed were ignorant or arrogant and they weren’t thinking ahead about the consequences. Except, this is false. The Fed knew EXACTLY what it was doing the whole time, and here’s the proof…

Way back in 2012 before Jerome Powell became Fed Chairman, he warned of a market crisis if the central bank was to hike rates into economic weakness after so many years of acclimating the system to easy money and QE. During the October 2012 Fed meeting Powell stated:

“…I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.”

In other words, Powell and all other Fed officials knew ten years ago what was going to happen. They knew that they were creating a massive financial bubble and that when they raised rates that bubble would collapse causing serious economic damage. Yet, they kept expanding the bubble, and now with Powell as chairman, they are popping the bubble. No one honest can claim that the central bankers were “blind” or ignorant. This is an engineered crash, not an accidental crash.

If the crash is deliberate then it is a means to an end, and there is no reason for the Fed to intervene to save markets at this time. Some people will argue that this puts a target on the Fed as a saboteur of the economy, and they wonder why the central bankers would put themselves at risk? Because they have a rationale, a way out, and it’s called “stagflation.”

Price inflation coupled with negative GDP is the basis for a stagflationary environment. The only other factor that is missing in the US today is rising unemployment, but this problem will arrive soon as numerous companies are slated to start layoffs in the winter. Stagflation is the Fed’s perfect excuse for continuing to raise interest rates despite plunging stocks. If they don’t hike rates then price inflation runs rampant and GDP declines anyway. If they return to QE then an inflationary calamity ensues.

In order to “save us,” they have to hurt us. That’s the excuse they will use.

It’s a Catch-22 event that they created, and I believe they created it with a purpose. But let’s imagine for a moment that the Fed has the best interests of the economy at heart; would a pivot back to QE change anything?

Not in the long run. Rising inflation is going to crush what’s left of the system anyway. Supply chain problems will only get worse as costs rise. To return to stimulus would indeed put a target on the central bankers. It’s better for them to pretend as if they are trying to fix the problem rather than continue with policies that everyone knows are draining pocket books.

Stocks saw a brief rebound this past week for one reason and one reason only – Rumors of a Fed pivot were spread and investors were hoping for a stop to rate hikes or a glorious return to stimulus measures. We will see many short rebounds in stocks like this over the next year, each one initiated by rumors of a reversal in policy. It’s not going to happen.

Will the Fed stop rate hikes? Sure, probably when the Fed funds rate is between 4% to 5%. Will that mean a reversal is on the horizon? No, it won’t. And it won’t mean that the Fed is done with rate hikes. They could start hiking again a few months down the road as price inflation persists.

Will the Fed return to QE? I see no reason why they would. Again, they are fully aware of the damage they have done with the QE bubble and the popping of that bubble. They would not have hiked rates in the first place unless they wanted a crash.

Consider this: What if the goal of the Fed is the destruction of the middle class? What if they are using the false hopes of small time investors in a return to QE? What if they are luring investors into markets with rumors of a pivot, tricking those investors into pumping money back into markets and then triggering losses yet again with more rate hikes and hawkish language? What if this is a wealth destruction steam valve? What if it’s a trap?

I present this idea because we have seen this before in the US, from 1929 through the 1930s during the Great Depression. The Fed used very similar tactics to systematically destroy middle class wealth and consolidate power for the international banking elites. I leave you with this admission by former Fed Chairman Ben Bernanke on the Fed’s involvement in causing the Great depression through rate hikes into weakness…

In short, according to Friedman and Schwartz, because of institutional changes and misguided doctrines, the banking panics of the Great Contraction were much more severe and widespread than would have normally occurred during a downturn.

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.” – Ben Bernanke, 2002

Is the Fed really sorry? Or are they just repeating the same strategy they used 90 years ago while acting as if they are unaware of the eventual outcome?

Depopulation Agenda Continues As World Leaders Prepare For Nuclear War

Some people in the mainstream have been talking about gold’s demise as an important financial asset.

Meanwhile, central banks continue to buy gold. What are the gold naysayers missing? Peter Schiff appeared on Fox Business with Charles Payne to talk about the price of gold and why some investors are starting to realize they’ll need gold as the Fed loses its inflation fight.

Payne opened up the interview by saying, “You’ve heard about the death of gold a million times. But what is it that people forget about gold? When it’s going down, moving flat, not moving, and it feels like, OK, it’s no longer what it might have been in the past.”

Peter said, “I didn’t get the memo!”

“And had I gotten that memo, I would have just thrown it in the trash. But what a lot of people don’t realize about gold is that it’s money.  It is liquidity. It’s everything else that loses value in relationship to gold. Gold is a better form of money than anything governments have come up with to replace it. And in times like this, where we have inflation that’s going to run out of control, and central banks that are powerless to rein it in because they’ve created it, and they’ve created economies that are dependent on it, more and more people, including central banks, are going to be returning to gold.”

Peter pointed out that gold sold off based on the notion that the Federal Reserve was going to win its fight against inflation. We had a rally in gold after the Bank of England surrendered to inflation and pivoted back to lose monetary policy to rescue its pension system. Peter said some people might be starting to realize that the Fed isn’t going to win either.

“The Bank of England was just as committed to fighting inflation as Powell, but as soon as it created the beginnings of a financial crisis, they did an about-face and went right back to quantitative easing. I think the same predicament is going to befall the Federal Reserve, and before too long, inflation is going to take a back seat to an even greater crisis — a financial crisis and a worsening recession. And the Fed is going to go right back to more quantitative easing. There’ll be no more rate hikes. In fact, there may be rate cuts. Inflation is going to be nowhere near 2% when they do that. In fact, it’s headed closer to 20%.”

Payne agreed with Peter, saying the Fed’s best weapon has been “jaw-boning,” and that he doesn’t see the central bank going as far as it claims. He also brought up the issue of the $31 trillion national debt. Will higher interest rates spark a debt crisis for the US government?

Peter reminded us that a year ago, Treasury Secretary Janet Yellen said there was no reason to worry about the national debt because interest rates were so low.

“Well, now interest rates have skyrocketed.”

When Janet Yellen made that comment, the yield on a 1-year T-bill was about .25%. Now it’s 4%.

“You’ve got a 16-fold increase in the cost of funding that debt. And remember, that debt keeps having to be rolled over. The government has very short financing on this national debt. So, it’s already a problem. And it’s going to become a much bigger problem. It’s one of the reasons the Fed is going to chicken out in the fight against inflation. Because the US government would be forced to default on that debt if it actually let interest rates rise high enough to bring inflation down to 2%.”

Depopulation Agenda Continues As World Leaders Prepare For Nuclear War

Update (2:43PM CST): PayPal has reportedly rescinded its updated policy to fine users $2,500 fines if they pushed purported “misinformation” following criticism by Tesla founder Elon Musk on Saturday.

“An AUP [Acceptable Use Policy] notice recently went out in error that included incorrect information,” the company reportedly stated. “PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy. Our teams are working to correct our policy pages. We’re sorry for the confusion this has caused.”

Tesla and SpaceX founder Elon Musk had weighed in on PayPal’s updated censorship policy Saturday, saying he “agreed” with a statement made by David Marcus, cofounder of Bitcoin-based company LightSpark, that PayPal’s new policy was “insane.”

Original story below:

PayPal announced a new policy allowing the company to sanction users with $2,500 fines if they advance purported “misinformation” or risk user “wellbeing.”

The financial services company, which has already banned certain individuals and groups over their political views, will expand its “existing list of prohibited activities” on November 3 — five days before the midterm elections.

Included in PayPal’s updated list of “prohibited activities” is posting messages or materials that “are fraudulent, promote misinformation, or are unlawful.”

Violating this new policy could result in a $2,500 fine “debited directly from your PayPal account.”

Violation of this Acceptable Use Policy constitutes a violation of the PayPal User Agreement and may subject you to damages, including liquidated damages of $2,500.00 U.S. dollars per violation, which may be debited directly from your PayPal account(s)…

Over the last several weeks, PayPal banned numerous groups for seemingly political purposes.

First, PayPal banned the nonprofit Free Speech Union over ties to Russell Brand, who moved his podcast from YouTube to Rumble in a statement against online censorship — it restored the accounts a week later after receiving backlash.

Then PayPal shut down the account of the parent activist group UsForThem, who campaigned to keep schools open during the COVID pandemic.

It also sanctioned Gays Against Groomers, a group that’s been pushing back against drag queens giving inappropriate performances in schools.

Jeremy Tedesco, vice president of corporate engagement at Alliance Defending Freedom, said that PayPal’s new policy will almost certainly have a “chilling” effect on free speech.

“Whatever PayPal’s intentions may be, censorship and chilling free speech is precisely the effect of these kinds of vaguely worded policies,” Tedesco told The Daily Wire. “We’ve seen social media companies use similar policies to stifle free speech on their platforms. We can expect a similar outcome with PayPal.”

Read the updated policy:

Twitter: @WhiteIsTheFury

Truth Social: @WhiteIsTheFury

Gettr: @WhiteIsTheFury

Gab: @WhiteIsTheFury

Minds: @WhiteIsTheFury

Parler: @WhiteIsTheFury

For most economists the velocity of money circulation is an important factor in determining the prices of goods and services.

If, for example, the quantity of money increased by 10 percent in a given year, while the price level has remained unchanged it would mean that there must have been a decline of about 10 percent in the velocity of money circulation.

If the quantity of money remained unchanged but there has been a 10 percent increase in the price level in a given period, it would mean that there must have been an increase in the velocity of money circulation of 10 percent in that period.

The idea of the velocity of money circulation is straightforward for most economists. For example, during a given year a particular ten-dollar bill may be used as follows: baker John pays the ten dollars to tomato farmer George. The tomato farmer uses the ten-dollar bill to buy potatoes from Bob who uses the ten-dollar bill to buy sugar from Tom. The ten dollar here served in three transactions. This means that the ten-dollar bill was used three times during the year, its velocity of circulation is therefore three.

A ten-dollar bill, which is circulating with a velocity of three financed thirty-dollar worth of transactions in that year. Now, if there are three billion dollars’ worth of transactions in an economy during a particular year and the average money stock is five hundred million dollars during that year, then each dollar of money is used on average six times during the year. Five hundred million dollars in money by means of a velocity factor has effectively become three billion dollars. This implies that the velocity of money circulation can boost the means of finance.

From this it is established that:

Velocity = Value of transactions / stock of money

This expression can be also presented as,

V = P*T/M

Where V stands for velocity, P stands for the average price, T stands for the volume of transactions and M stands for the stock of money. This expression can be further rearranged by multiplying both sides of the equation by M. This in turn will give us the famous equation of exchange

M*V = P*T

This equation states that money multiplied by velocity equals the value of transactions. Some economists employ GDP instead of P*T thereby concluding that

M*V = GDP = P*(real GDP)

The equation of exchange appears to offer a wealth of information regarding the state of an economy. For instance, for a given velocity and a given stock of money one can establish the value of GDP. Note that from the equation of exchange a fall in the velocity of money (V) for a given money (M) results in a decline in economic activity as depicted by GDP. Furthermore, information regarding the average price or the price level allows economists to establish the state of the real output.

For most economists the equation of exchange is regarded as a very useful analytical tool. The debates that economists have are predominantly with respect to the stability of the velocity of money circulation. If velocity is stable, then money becomes a very powerful tool in tracking the economy.

The importance of money as an economic indicator, however, diminishes once the velocity of circulation of money becomes less stable and, hence, less predictable. An unstable velocity of the circulation of money implies an unstable demand for money, which makes it harder for the central bank to navigate the economy toward the path of economic stability.

Does the Concept of Velocity of Money Circulation Make Sense?

The equation of exchange says that for a given stock of money, an increase in its velocity of circulation helps to finance more transactions than money could have done by itself. However, does it make sense?

Consider the following: a baker John sells ten loaves of bread to a tomato farmer George for ten dollars. John then exchanges that money to buy five kilograms of potatoes from Bob the potato farmer. How did John pay for potatoes? He paid with the bread he produced.

Note that John the baker had financed the purchase of potatoes not with money but with bread. He paid for potatoes with the bread that he produced using money to facilitate the exchange. Money fulfils the role of the medium of exchange, not the means of payment. Ludwig von Mises writes:

Commodities, says Say, are ultimately paid for not by money, but by other commodities. Money is merely the commonly used medium of exchange; it plays only an intermediary role. What the seller wants ultimately to receive in exchange for the commodities sold is other commodities.

The number of times money changed hands has no relevance whatsoever on the bakers’ ability to fund the purchase of potatoes. What matters here is that he possesses bread that serves as the means of payment for potatoes.

Being the medium of the exchange, money does not circulate; it always belongs to somebody and is always someone’s property. According to Mises:

There is no fraction of time in between in which the money is not a part of an individual’s or a firm’s cash holding, but just in circulation. It is unsound to distinguish between circulating and idle money.

Mises also writes:

Money can be in the process of transportation, it can travel in trains, ships, or planes from one place to another. But it is in this case, too, always subject to somebody’s control, is somebody’s property.

The Velocity of Money Circulation and Goods Prices

Does the velocity of money circulation have anything to do with the prices of goods? Prices are the outcome of individuals’ purposeful actions.

By entering an exchange, both John and Bob are able to realize their goals and promote their respective well-being. John concluded that it is a good deal to exchange ten loaves of bread for ten dollars for it will enable him to procure five kilograms of potatoes. Likewise, Bob had concluded that the ten dollars for his five kilograms of potatoes is a good price, for it will enable him to secure the ten kilograms of sugar.

Observe that price is the outcome of different ends, and hence the different importance that both parties to a trade assign to means. The fact that so-called velocity is three or any other number has nothing to do with goods prices and the purchasing power of money as such. Individual’s purposeful actions determine the prices of goods and not velocity.

The Velocity of Money Circulation Does Not Exist Independently

Contrary to mainstream economics velocity is not an independent entity—it is always the value of transactions P*T divided into money M—i.e., P*T/M. According to Murray N. Rothbard:

But it is absurd to dignify any quantity with a place in an equation unless it can be defined independently of the other terms in the equation.

Given that V is P*T/M, it follows that the equation of exchange becomes M*(P*T)/M = P*T, which is reduced to P*T = P*T, and this is not a very interesting truism. It is like stating that $10 = $10, conveying no new knowledge of economic facts.

The average purchasing power of money cannot be even established. For example, in a transaction the price of one dollar was established as one loaf of bread. In another transaction, the price of one dollar was established as 0.5 kilograms of potatoes, while in the third transaction the price is one kilograms of sugar.

Observe that since bread, potatoes, and sugar are not commensurable no average price of money can be established. Now, if the average price of money cannot be established, it follows that the average price of goods (P) cannot be established either. Consequently, the entire equation of exchange falls apart. It is not a tenable proposition and covering it in mathematical clothing cannot make it more acceptable.

Additionally, does a so-called unstable velocity of money circulation imply an unstable demand for money? The fact that people change their demand for money does not imply instability. Because of changes in an individual’s goals, he may decide that at present it is to his benefit to hold less money. Sometime in the future, he might decide that raising his demand for money would serve better his goals. So what could possibly be wrong with this? The same thing that goes for any other goods and services—demand for them changes all the time.


Contrary to popular thinking, money does not circulate. Instead, it always belongs to somebody.

UN Treaty Creates Medical Dictatorship Under Biden

Allegedly, Republicans appeal to racism via “dog whistles” or the “Southern Strategy” and the like, but that brings up the question, “Do Republicans have an economic incentive to appeal to racists?”

If racism is a “winning” issue, why don’t Republicans win more frequently? Republicans lost in 1992, 1996, 2008, 2012, and 2012, and—as Democrats never fail to mention—they lost the popular vote in 2000 and 2016, essentially winning by flukes that no one could have planned. That’s scarcely a record that justifies the claim that racism wins, so are we accusing the Republicans of racism or stupidity?

In other words, let’s think about this problem like an economist. If you were a political entrepreneur seeking to maximize your votes, why would you appeal to racists? Obviously, the number of people alienated by such appeals exceeds the number of people attracted by such appeals (hence, the losing record detailed above), so why would you persist in following such a losing strategy?

And consider the Republicans who won. Does anybody think George W. Bush was more racist than Trump? Yet, he had the better record, no? Why would anybody respond to George W. Bush’s wins by saying “we need to go more racist”? It’s just risible.

Indeed, if Republicans—mistakenly or otherwise—believed racism works politically, then shouldn’t they be emphasizing their racism? Why would their political opponents emphasize their allegedly “winning” attribute (their racism)? If Burger King spent millions to persuade you that McDonald’s hamburgers are made from frozen patties, would you believe that McDonald’s believes consumers prefer frozen patties? If frozen patties were a plus, wouldn’t McDonald’s emphasize that their patties are frozen?

Perhaps you believe that the vote-maximizing position is to be a racist while denying it, but then wouldn’t Democrats do the same thing? Why would they loudly denounce racism while engaging in it? Don’t they like to win?

In short, the “racism” thing assumes that Republicans don’t want to win, for some reason, and that Democrats don’t either (because they too should adopt the “we’re secretly racist” strategy). If secret racism works, then there’s no reason for anyone to eschew it. BK could make burgers from frozen patties while not talking about it, if that strategy worked; yet, lots of chains emphasize that their burgers are never frozen. Why? Do they not realize that using secretly frozen patties is the profit-maximizing position? Are they too stupid to see the truth?

Here’s what really happens: Democrats accuse the Republicans of racism because it allows them to maximize their antiracist vote while pursuing policies that attract other voters who either don’t care about that issue or who prioritize something else. If, for example, you want to reward unions with policies that crush the economy, then you need to maximize your antiracist vote to offset the losses you’ll suffer as a result of your terrible economic policies. That is, the only rational explanation of the Republican Party’s “racism” problem is that Democrats know antiracism wins votes, so they want to attack the Republicans on this issue in order to maximize their antiracist vote without actually needing to do anything that might lose votes.

So, for example, Democrats could support reparations, but that’s expensive, and it might lose votes, so they accuse the Republicans of racism. That way you get all the voters who wanted reparations without suffering any of the consequences.

From the Republican perspective, you can’t do much about the accusation of secret racism precisely because the whole point of secret racism is that it’s secret. Of course, you’d deny being a secret racist, it’s what makes you a secret racist!

Democrats, naturally, have now gone to the next level: even black Republicans are secret racists! Remember the allegation is that denying you’re a racist while being a racist is “vote maximizing,” and what better way to deny that you’re a racist than to be black! You’re just a super effective secret racist.

Just as Republicans accused Democrats of being Confederates long after that claim had any basis in fact, Democrats will accuse Republicans of being racists as long as the accusation works, but economics tells us the accusation can’t possibly be true. If Trump—or anybody else—thought racism works politically, you wouldn’t learn that from their opponents; they’d tell you themselves. If anybody thought “secret racism” worked, they’d all do it.

(There’s no real market for secret racists for the same reason and in the same way there’s no market for secretly frozen burgers; either consumers don’t care about frozen burgers, or they prefer them—there’s no such thing as “features” consumers don’t want to know about.)

How long will consumers/voters prefer “antiracist” candidates? Answer that, and you’ll know the future of American politics. But let’s stop pretending racism works politically—it doesn’t. If Americans truly were racists, then allegations of racism wouldn’t be allegations: they’d be compliments or descriptions. The fact that virtually everyone considers these allegations to be allegations utterly refutes the proposition that America is a racist nation. The fact that an “antiracist” party does so well at the polls is simply the coup de grace to such nonsense.

Economics is a powerful tool for analysis, and one of its greatest attributes is its ability to cut through rhetoric; let’s use economics to rebut this highly destructive and highly divisive myth. If you prefer Democrats, then—by all means—vote Democratic, but don’t pretend it’s because the Republicans are racists. The Republicans are many things, incompetent politicians seeking the nonexistent secret racist majority isn’t one of them.