Episode 104 · 2021-10-23 · 36:24 · Original in Finnish
Money Tsunami and Freedoms | Tuomas Malinen | Negotiator 104
Originally published as “Rahatsunami ja vapaudet | Tuomas Malinen | Neuvottelija 104”
The GnS Economics chief executive Tuomas Malinen builds the episode on three levers whose combination he considers dangerous: growth in the money supply, production bottlenecks, and state control over individual behaviour. On inflation he sets out a mechanism the indicators failed to see — while the service sector was shut its contribution to the consumer price index was zero or negative, at the same time as goods ordered with stimulus cheques were congesting freight markets. He names two historical conditions for hyperinflation. The Federal Reserve's balance sheet doubled from four to eight trillion in two years, and in Malinen's view central banks are now trapped. The second half deals with freedoms and the covid pass, and the host states his own position openly.
Core theses
- The index understated inflation for a mechanical reason: a shuttered service sector contributed nothing to it while goods prices were already moving.
- Doubling a central bank balance sheet in two years is the fact; whether it constitutes a trap is the contested inference.
- The two historical conditions for hyperinflation are named, which makes the claim falsifiable rather than rhetorical.
- The covid pass argument is about precedent rather than efficacy, and the host disagrees on air.
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Summary
The GnS Economics chief executive Tuomas Malinen builds the episode on three levers whose combination he considers dangerous: growth in the money supply, production bottlenecks, and state control over individual behaviour. On inflation he sets out a mechanism the indicators failed to see — while the service sector was shut its contribution to the consumer price index was zero or negative, at the same time as goods ordered with stimulus cheques were congesting freight markets. He names two historical conditions for hyperinflation. The Federal Reserve’s balance sheet doubled from four to eight trillion in two years, and in Malinen’s view central banks are now trapped. The second half deals with freedoms and the covid pass, and the host states his own position openly.
The mechanism the index missed
This is the part that holds up. With the service sector closed, the services component of the consumer price index was flat or falling at precisely the moment goods prices were being pushed up by stimulus-funded demand hitting congested freight. The headline number therefore understated what was happening, and it did so for a reason anyone could have checked.
Four trillion to eight
The balance sheet number is a fact. Whether it leaves central banks trapped is an inference, and it is where the episode moves from description to forecast. The subsequent tightening cycle went further than this episode expected was possible.
Two conditions, named
Malinen does not simply invoke hyperinflation; he states the two historical conditions he thinks produce it. That is what makes the claim checkable, and checked against the following three years it did not come out.
Watch
The recording lives on the Neuvottelija channel: Rahatsunami ja vapaudet | Tuomas Malinen | Neuvottelija 104. A Finnish edition of this episode is published at www.neuvottelija.fi.
In depth
The Neuvottelija AI editions carry a long-form write-up of this episode: English · suomeksi.
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People and topics
Guests: Tuomas Malinen