The Inflation Lie is Destroying America
Updated August 25 , 2025
Since 2020, when the original article was first written, the equities market has continued to be spoon fed massive inflows from Government(s) to counter the massive outflows due to rising rates. This continues unabated because it has been wildly successful. But it is not sustainable, regardless of our new Administration’s efforts to boost economy with Tariff income.
We now appear to be at the beginning of the end of our fake economy, so I felt it was time for a situation report.
Welcome to the wheels coming off Western Governments (and our) debt nightmare.
Since 2008, the United States Government and it’s main source of wealth - the US Stock Market - has been ramped up by two main factions:
(1) The Fed and other Central Banks (Quantitative Easing), and
(2) Corporate Boardrooms (The Buyback).
In other words, the market goes up not because of objective economic factors or corporate quality but because of Government actions that lower interest rates (by lying about inflation which dilutes sales and earnings with declining dollars ) and stock buybacks that push prices up artificially. This may also include direct stock purchases by the Federal Reserve (3), a moral hazard and possibly against the Fed charter.
When the fan finally gets whacked no stop-loss program will help you as you are just the “little guy” who will get as slaughtered as the Shoe Cobblers who became investment advisors in 1929.
“In the winter of 1928 Joe Kennedy, father of JFK and major stock market player, stopped to get his shoes shined. The shoeshine boy leaned in and said, “Buy Hindenburg”. Kennedy began unwinding his positions saying, “You know it’s time to sell when shoeshine boys give you stock tips. This bull market is over.”
Stocks have gone up with the new FED policy supporting the Rich 401-Kers (Investors) over the Not Rich Working Classes (Savers) by forcing people, many of whom are my friends who don’t understand what is happening, to invest their meager nest eggs in the stock market because alternatives were taken off the table with near negative interest rates. Even though you have savings that you want to protect, you don’t want to earn nearly nothing. So, most Americans that could chose to buy stocks, or bonds which are even more inflated because of the near zero interest policy of the Fed over the last 15 years. But as we shall see, that has changed and many have left the market.
Stocks have gone up, a lot, coincidentally well over the Govt declared rate of inflation (14% S&P 500 annual return 2009-2022). This should be a red flag that something is amiss.
Continuing to play in the Ponzi game where there is no underlying economic reality can be deadly, you just don’t know when it explodes. Even if you do make money in the market, I suggest it is immoral to do so on the backs of future generations that essentially pay for your gains when they must pay off the costs of QE in higher interest rates to curb QE caused inflation. Who do you think will be paying for all that QE money going into stocks and government debt to assure further debt? Our kids, and theirs. Not to mention the inflation costs that those least able to afford pay the most as a % of their disposable assets. Is that immoral? You be the judge.
The Cost of Our Happiness. Future generations will be on the hook for $360,000 per capita and $930,000 per household for our Government’s vote buying debt and the unfunded liabilities related to Social Security, Medicare, Government pensions and the like. And since half of America have nothing in the bank and can sometimes afford to pay for a McDonalds dinner without a credit card, that means the actual debt on people with the ability to pay (i.e. taxpayers) may soon approach $1,000,000 per person. Goodbye retirement plan.
Stocks and corporate bonds may get you a decent dividend or yield (now at a high risk vs CDs/Money Market Funds) but yields are well below actual inflation in our economy. The inflation that is not reported. They do not want you to know this.
From Management Study Guide on Inflation:
The goal of the central banks is to keep inflation at a bare minimum. However, the policy of quantitative easing does the exact opposite. Since this policy creates money and uses this money to further amplify lending by using this money as reserves, it is inherently inflationary.
Investopedia
The Con. To get around this little dilemma, the powers that be devised a scheme that depends on false measures, propaganda and mass psychosis to convince us that our living costs have risen slowly (also justifying low wage and Social Security demands) because inflation barely existed, but this was economically impossible. In the jargon of the day, this is called a Psyop.
But, why doesn’t the government just tell the truth on Inflation? They have no choice. They must lie. Why did they do this?
The Government and Central Bankers have hidden inflation for a very long time because of their actions to boost stocks, bonds and real estate (the basis of American wealth) without the Government they serve having to pay the bill of inflation via higher interest rates to keep the Government functioning – and growing like an out of control malignancy.
The cost of living has been going up so rapidly in the last 20 years that half of America with two wage earners have virtually no savings in the bank. Part of the problem are medical and higher education costs that have had an inordinate impact on savings, along with no interest until recently on said savings.
If the real cost of living was even remotely close to the levels reported by the Government with a contrived CPI, our retail revolving credit debt would not have climbed 40% in 5 years to $1.4T in order to may ends meet with multiple jobs. Total consumer credit has increased nearly $1T just since 2019, before the massive Covid related QE money supply programs took hold. When incomes (if you even had income) can’t keep up with the real cost of living, life goes on the card.
If inflation was as reported, half of America would not be living with savings accounts having less than 2 weeks emergency backup pay. They also wouldn’t be fearing a health crises that could put their family into bankruptcy because of medical costs that have gone up at twice the rate of reported inflation. To make ends meet, they put their living expenses “on the card”. Just like the Uniparty Congress.
In 1975, the cost of a median home (the primary source of American wealth and financial security) was 5X real per capita income. Today, it’s over 8x. That what happens when your wages and SS payments, tied to the CPI index, rises 3% a year. The unraveling of home prices has already begun.
Inflation Update. Real inflation, likely in the neighborhood of 12-15% annually vs the nonsensical 2.7% “official” rate, cannot be reported because interest rates would have to rise much, much higher than we have seen this year to combat the ever declining power of the dollar as world currency.
Here is actual inflation (less the cost of rising taxes) as calculated before changes were made to make inflation artificially low to support QE wealth distribution programs and the permanent printing of our unbacked fiat currency:
The results of all this are many, which is why the US Government does not want to report real inflation. If they told the truth, and the Fed Funds rate just went to half of what we had in 1980 to fight similar inflation, we would be in big trouble. In fact, we have moved to the mean Fed Funds rate over the last 20 years (4.5%). But this is not anywhere close to the rates needed to kill the inflation monster.
In June 1981, the Fed Funds Rate was at 19.1%. That was needed to squeeze out inflation of almost 14%.
Our Big Problem. In order to kill inflation, we need significantly higher interest rates than even where we are at now. But that will not happen because the low inflation Psyop has been largely successful.
And to help this fakery along in a fools game, they will continue to redesign our cost of living inflation algorithm as needed, until the inflation lie can no longer be told and the possibility of hyperinflation begins (defined as more than 50% increase in prices/month), if we calculate cost of living correctly.
America has never had hyperinflation which is a reason why hardly any economist believes its possible. But I would have them look at the monetary injections that have also never occurred.
Still, they do all of these things because the Uber rich not only likes their fully owned assets inflating up but can easily absorb 10-20% real inflation rates. Let ’em eat cake.
This is the kind of stuff that eventually leads to really bad things. Like market crashes and worse, if nothing changes, citizen revolts ala 1789 and 1917.
The Inflation Lie Must Continue
We can no longer simply print money to payoff domestic (80%) and foreign debt holders (20%) of our $37 Trillion debt ($28 Trillion debt when this article was first written in Dec 2020).
If inflation was truthfully told interest rates would rise rapidly and very bad things will happen:
Government Collapse (can no longer viably finance $37T when paying normalized rates to lenders).
Stock Market Collapse (no reason to buy insanely priced stocks, keep reading)
Real Estate Collapse (can’t qualify to buy median price home when payments shoot up by half)
I won’t go into the overriding politics of government collapse, which is self explanatory. Let’s talk about stocks.
As rates rise, as we have seen, people bail on stocks because the reason they bought stocks in the first place (no interest on savings), even in times of Recession heading to total collapse as we have today, would simply cease to exist. Are stocks too high now? Emphatically yes.
Situation Report for the Shoe Cobblers
P/E (Price/Earnings) Ratios. It used to be that the widely recommended trailing P/E ratio was a good tool for buying stocks. Then, almost all of the investment bankers and brokers decided to change the game by valuing on FORWARD P/E ratios. This is just a magic trick.
So, the best measure is a trailing P/E which is based on actual as reported earnings, not some broker’s pie in the sky estimate that may or may not happen. And everything is always rosy to someone on commission.
The Case Schiller Trailing P/E ratio is a reasonably good measure of stock market valuation overall because it uses a 10 year Trailing P/E ratio, adjusted for inflation. This takes out the big bumps in the road. If you look at the Case Shiller S&P 500 P/E now, I think you can say it is a bit alarming:
As of August 18, 2025 the current S&P P/E ratio is nearly 39. This means that the stock price valuation of the S&P 500 is 39X the 10 Year trailing inflation adjusted earnings. Stocks are currently priced at more than twice as high as the historical median, in the face of inflation and recession (stagflation), yet I hear people that were educated in College with MBAs in Economics or Sociology on Seeking Alpha say “It’s only up from here!” That’s exactly what they said before the most insanely priced stock market in US History crashed into oblivion – the 2000 Dot.com “Tech Bubble”.
Everyone out of the Pool
According to the WSJ, a wave of unheard of stock selling started about the time rates began to rise in 2020. It is estimated that $4 Trillion left the market just since 2020 and this is not abating. As of 3rd Qtr 2024, there is an amazing $10.24 Trillion sitting it Money Market Funds and CDs, up from $6.3 Trillion in 2020. Why didn’t the market crash naturally as it should have? And why in any world of reality would this happen instead?
If you invested $100 in the S&P 500 at the beginning of 2024, you would have about $126.84 at the end of 2024, assuming you reinvested all dividends. This is a return on investment of 26.84%, or 33.01% per year.
officialdata.org
The Lifeguard for Mr. Global – The Federal Reserve Bank
Question: How can the US Stock Market be at record highs with the biggest outflows in US history in real and percentage terms since the Fed began raising rates in 2022 from near zero?
The only answer is the possibility of direct Fed purchases of common stocks. These actions, and to a lesser extent Corporate buybacks, have now become potentially fatal to our economic system. Now, we are looking at economic collapse, not corrections (5)
They can do this directly through member Bank purchases (e.g. JP Morgan has over $127 Billion in equities in their own account as of 12/31/24) of stocks and indexes with QE monopoly money deposited to them awaiting some form of distribution via US Treasury bond purchases or business loans - which largely failed to materialize.
The largest of our “too big to fail” banks JP Morgan has also been buying their own stock at record levels, just reporting an amazing $50B repurchase plan. Did they use freshly minted QE dollars to buy their own stock?
With these historical outflows, stock prices have barely slowed for a drink of water and are much higher now than October 1929, Black Tuesday. I submit this as indirect evidence of the Fed buying stocks directly with QE money, likely against their Congressional Charter (Sec. 14) (3).
It could happen no other way to keep stocks in record territory during massive Covid/AI induced unemployment, a global recession, 10-20% excess mortality worldwide due to Trumps mRNA programs (Warp Speed), a near Civil War with 2 confirmed assassination attempts against a Presidential Candidate. Oh, and the prospect of WW3 beginning in either Eastern Europe or Middle East.
The pattern is as clear as Election Fraud – when the market suddenly dips on huge volume, it is suddenly bought on huge volume.
Deja Vu All Over Again
Going back to the beginning of the 20th century, the only time the market was priced higher than today was during another Tech Bubble called the Dot.Com crash in 1999/2000. We have blasted right past Black Tuesday prices, the beginning of the Great Depression.
Reality finally hit in early 2000 and even non Tech stocks went down 50% or more. Many Tech stocks lost 70% or more in value, most of the purely internet companies went bankrupt.
As we move into 2025, we have the highest trailing P/E ratio in US History (ex Dot.com) and don’t even have the justification of a rosy transformative future to justify the market.
Today’s future includes permanent AI job destruction of at least 60% while the top 7 Corporations in America that are responsible for our unemployment demise are moving towards 50% of the entire S&P 500 market cap (2). Small business (the backbone of America) is dying at the highest rate in my lifetime. They were left behind the Big Guys and have barely gained anything in 4 years. And the S&P 500 reached all-time highs in 2024. And in 2025.
Bankruptcies since 2023 have exploded past even the Covid Bioweapon outbreak levels.
Happy Days!
An Illegal Economy?
Now that interest rates have moved up (but not enough to kill the inflation monster) cash has moved out of the stock market as fast as the Democrat Party jettisoned Biden in 2024 for another empty suit. It’s continuing to move into CDs and money market accounts paying normalized rates, which is finally something good for your Grandma.
With the biggest outflows in stock market history over the last 2 years, how the market has not crashed yet and stayed in the stratosphere is a question for the ages. As noted, this can only happen from the results of direct stock market purchases by the Fed, obscenely low rates (still) relative to actual inflation, possibly illegal corporate buybacks and foreign investments. None of these factors have anything to do with economic prospects on macro or micro levels. You can read about the buyback game in Part 2.
Counter Argument
The contrarian argument to the above is simple. As long as the Fed keeps rates low relative to inflation – which it is even now – and prints money that finds its way into the market and corporate boardrooms, you can’t go wrong.
Until buybacks are made illegal as a form of price manipulation as currently allowed and The Fed is restricted from stock purchases (a hypothetical yet to be proven because QE money has never been audited), there will always be a rapid rebound from any selloff. But this Ponzi game of chance will end when inflation takes hold so hard that it can no longer be hidden and interest rates go up to the Volcker levels in the 1980s to placate the “revolting” masses who won’t be able to afford food (4).
Then, none of us in the market will be able to catch the falling knife greased with lies about inflation and the bubbling economy. The market can easily collapse all at once by 60-70%+. It has in the past, and it will again when the “too big to fail” game can no longer be financed by debt driven inflation.
Investing in the current equities market is also immoral by putting our temporary stock market gains on the backs of future generations that will not be employed and suffer higher government debt/tax burdens and much higher inflation that they cannot afford without themselves going into more debt.
And, accepting UBI payments and a life in a digital “debtors prison”.
The Final Showdown – Real Inflation vs QE/Fed and Buybacks
Nobody can say when the financial collapse will happen, but as we close out 2025 time is running out for our spiked financial system.
When you start to see that the inflation lid can no longer be kept closed with fake Government Inflation reports and rates begin to rise slowly, and then more rapidly to combat what will become hyperinflation, if you aren’t already out of the stock market it will be too late.
Then it’s all moot when a loaf of bread is $100 and you can just light your Cigars with our old and nearly worthless currency that “stablecoin” won’t fix.
The inflationary and even hyperinflationary effects will be economically impossible to avoid with all the Govt and Buyback money keeping stock prices at record levels even in the face of trillions leaving the market since 2022. That displacement without effect is a red flag that Capitalism has been replaced by something else where markets are made by Government and not the free movement of private capital. Unless we get rid of the Federal Reserve Banking system controlled by Mr. Global and his elites, we will never have a stock market valued by the natural laws of supply and demand.
Even Trump, our so called “free market” MAGA Capitalist, has begun a very frightening venture into Fascism with his Govt buying shares of large Corporations.
Unless something changes with our fake economy, we be happy owning nothing but our on/off virtual money and renting a walk-in closet size flat in a 15 minute city.
(1) Donald Trump wants to invest even more in AI/Big Tech to continue the biggest wealth and jobs transfer in human history from the poor to rich. That’s another story for another day.
(2) The result of this unheard of wealth transfer to Tech is that the top 7 companies in the S&P 500 (Malevolent 7) now have 33% of the entire market value of the 500.
(3) Section 14 describes things the Fed can purchase directly, like US bonds. The purchase of equities is not mentioned specifically and has historically been excluded by omission as a Fed Action but the restriction is not explicitly stated in either Federal Charter or Federal Reserve Act (Chatbot could not answer), only by omission are stocks “excluded“. There is no QE audit trail, unlike buybacks.
(4) We are almost there when 1/3 of Americans are eliminating or reducing insurance in order to feed their families.
(5) Getting close to the end with Trumps 10% (for now) Government stake to save a top American Corporation (e.g. Intel) from their insane buybacks that boosted management compensation instead of critical R&D. And helped wreck a once great company for greed.
Sic Semper Tyrannis
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