The slide in the background was part of a presentation I helped give in 2019 on the economics of installing solar that would be connected up to the Lubbock Power and Light (LP&L) grid. If you scan my 46k tweets on Twitter, you'll find more than a few where my exasperation with the economics underlying not only solar installations, but the whole way we look at the 'economy' is laid bare.

 

There's often this disconnect between the economics in our personal lives (like the decision on whether to install solar) and the larger macroeconomic terms that get thrown around like GDP, inflation, the FED debt, and the 'economy' itself. I labeled this section 'Money' instead of 'Economy' because the latter means a hundred different things to a hundred different people. The 'economy' has a very different meaning to someone living on the streets than it does for someone in a corporate boardroom. It's a buzzword that we should be very hesitant in using without further explanation. Money, on the other hand, is a man-made creation with largely specific origins. Most all of us in this part of the World use the U.S. dollar for almost all of our transactions. The history of the U.S. dollar has largely been written down and can be analyzed...

 

Can the Federal government go bankrupt?  Jodey Arrington often says so—timestamp around 1:10. I don't know if he really believes that, but even Rush Limbaugh knew that was BS:

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"How many years have people tried to scare everybody about [the deficit]? How many years, how many decades have politicians tried to scare us about the deficit, the national debt, (Sen. Jim Sasser pronunciation) "the dafycit," any number of things? Yet here we're still here, and the great jaws of the deficit have not bitten off our heads and chewed them up and spit them out."

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Rush is right. If you want a more academic take you can look at this clip where Donald Trump also lets the cat out of the bag. The Federal government issues the U.S. dollar... they can't go bankrupt. If you could 'print' your own money, could you go bankrupt? So politicians need to stop scaring us that way.

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But wait, you might say...maybe we can't go bankrupt, but we can sure end up like Zimbabwe, or Greece, or the Weimar Republic— HYPERINFLATION!!  Oh no!!

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Anything is always possible, but if you look at all those cases, you'll see that there was a tremendous loss of productive capacity. I like to look at it this way: if you are a small country, or a country like Germany after WWI where you have had much of your infrastructure destroyed or you have to give resources away to France, why would anyone (foreign or domestic) want your currency if you have nothing they want to buy?  What are the real resources—physical, human, technological, climatological, etc... that your country has to offer? In the end, it's not the currency that matters, it's what lies behind it.

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So... I hope we haven't gotten to a point in this country where people think we don't have anything to offer in the U.S. As one example, West Texas is on the southwest corner of one of the most productive agricultural regions of the World.

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Wait, wait...  We are having inflation (written January 2022).  True, so what's the cause? Jodey has his ideas that seem to revolve around the idea that Congressional spending=inflation. Put aside the fact that this idea of spending on things like the military is never questioned with respect to inflation, is his premise right?

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The attached video goes into the case. I like to start where prices are actually set. Sellers set prices. Usually businesses are the sellers.  Sometimes governments, sometimes individuals, but usually businesses. Who has the greatest pricing power of those sellers? Not the small farm or business owner. Maybe not even regional or statewide sellers. At the top of the food chain are the multinational corporations. Profit Inflation is Real.

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Let's see how their profits are doing during the last few years—lumber, used cars, oil, shipping, meat packers, etc...

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Furthermore, inflation isn't the same everywhere around the World- even in places that have some of the largest deficits. Perhaps there's more to it?

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Not all Countries-Japan

'Entrenched expectations built up through decades of little to no inflation play a big role in explaining why rising producer costs have not fed through to consumer prices. Domestic companies are notoriously unwilling to pass on increases in  the prices of imports to consumers.'

Not all Corporations

'Behind all of this are demands from Wall Street investors and analysts, who will explicitly punish companies that don’t step up and gouge their customers. When Target said it would not raise prices after exceeding its profit estimate, its stock sank.'

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Not all Lawmakers

"This is one thing we have to do," said Rep. Heather Wilson, R-N.M., chief sponsor of the bill that for the first time would create a federal law on energy price gouging. The legislation is supported by state attorneys general.

"American consumers are demanding protection from price gouging," said Rep. Sherwood Boehlert, R-N.Y., in floor debate.

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