Dr. Malmgren:  “If you look at the data, things like airline ticket prices are going up by 2.7 percent versus the official inflation rate of below 2 percent.  If you look at things like what hotels are charging for a stay, they are adding all these new fees such as $2 to store your luggage for the day, or other small fees such as $1.60 if you want to use the in-room safe. 

If you put stuff in your own minibar they will charge you as much as $27 a day for that.  If you want to print your boarding pass that could be as much as a $10 transaction.  Also, if you want to skip the check-in line that fee would be $25.  And to actually restock the minibar is an 18 percent administrative fee....

Continue reading the Dr. Philippa Malmgren interview below...


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“These things are all telling us that the actual price that we are having to pay for regular things is higher than what the official government statistics say it is.  So it’s a kind of hidden, stealthy inflation that is very, very real.”

Eric King:  “We both know that governments in the West and in Japan have to attempt to inflate their way out of the massive debt problems they face.  A decision was made this time versus the 1970s to lie to the people -- to release phony government statistics about inflation and real GDP.  What about the decision to attempt to inflate away the debt and to mislead the public about the actual inflation numbers?”

Dr. Malmgren:  “It’s such an interesting subject because I’ve been very privileged to have worked in that inner circle.  I was the President’s advisor in the White House on this and in the meetings with the Chairman of the Fed and the team there.

I think what happens is that all the other options for dealing with the debt are so unpalatable and so bad that they back into the decision to inflate away the debts and to debase the currency.  So they take the option that leads them down the road of inflation.  Of course no central banker wants to admit that this is what they are doing so they come up with other excuses.

But I think it’s interesting that Janet Yellen is saying we should go above the inflation target for a while.  That implies, ‘Yes, we are going to inflate.’  The tricky part is whether the Fed can control the outcome.  I mentioned last week that Paul Volcker warned that you can’t control the outcome, and he believes it is already too late to control the outcome.

The point I make about showing people the hidden price hikes, the ‘shrinkflation,’ is a result of companies feeling the margin pressure.  Therefore, when you open a box of chocolate it has less product in the box but it costs the same price.  The reason this is important is because that’s what happened in the 1970s.

When we saw this in the 1970s it was the way businesses dealt with the rising input costs until it reached a point where they actually had to begin to raise prices.  It is at that point the Federal Reserve’s inflation data moves and then you begin to see the inflation in the data.  But even then we know the Fed isn’t going to react.  It’s going to say, ‘Well, OK, now we are at 2 percent inflation and maybe we can go to 2.5 percent or a little higher for a while.’  So, yes, there is a deliberate effort to go down the inflation path.  I’m just saying they have been backed into this inflation strategy.”

Eric King:  “But when your father was there at the White House and he was advising the President during the chaos of the 1970s, they didn’t lie.  They put out the real inflation numbers.  Meaning, they were honest about the inflation data.”

Dr. Malmgren:  “Yes, and that inflation is what we are going to face.  Right now we are in a similar period to the early 1970s where they also had this ‘shrinklfation’ going on, this precursor to inflation. 

Once inflation genuinely begins, and I think it is now, this is when the difficulties really begin.  Hershey’s Chocolate just announced an 8 percent price hike, and Smuckers Jam announced a 9 percent price hike.  So you can see the price hikes are now beginning.  This will feed into the data and then the Fed and other central banks are going to be trapped in a corner.

At that point a big fight is going to break out about how to deal with the inflation.  In the 1970s it took 5 years of going back and forth before they concluded that it was most important to fight the inflation.  And I think we should anticipate that we are going to have an argument about this same topic which is going to last a few years, and that means a period of great uncertainty that we should be planning for.”

Eric King:  “As the governments go through this process of attempting to inflate away the debt and they destroy the value of the currency, the people who suffer are the poor and the elderly.  It really becomes a human tragedy and an unmanageable situation because it’s so destructive to these people in terms of how they are just going to survive the inflation.  So it’s very tragic and many have argued this inflation process is immoral.  Maybe it is a necessary evil but the central banks are still destroying these people’s lives.  What are your thoughts on the suffering and the human tragedy that takes place as a result of these irresponsible and destructive policies?”

Dr. Malmgren:  “This was a major reason for my writing the book on this subject titled SIGNALS: The Breakdown of the Social Contract and the Rise of Geopolitics.   I could see that you are exactly right, the people who will be hurt the most are the poor, the weak -- the ones who don’t have savings and who don’t have the information to be able to manage this terrible process of governments inflating.

And I think there are enormous social consequences to an inflation.  My dad always reminds me that in the 1970s everybody did understand that the poor would get crushed and therefore there were wealth transfers that took place during the 1970s.  Now, today we have a big argument in America about benefits -- who gets them and who doesn’t get them.  It’s a very tough and difficult argument, but inflation does ravage the low income people so violently that inevitably governments will have to start throwing money in that direction. 

And I would say that the events we are seeing in Ferguson are maybe an example of this.  The pain threshold is being reached in certain communities in the United States.  And it will always be the poorest communities that feel the grocery bill going up faster than everybody else.  And since we can’t withstand social unrest, governments will try to find a way to push more capital in that direction.  So then you will have two issues: inflation and wealth transfers, and that becomes doubly controversial.”

IMPORTANT - To register to be on the interest list for Dr. Malmgren’s fantastic new book SIGNALS: The Breakdown of the Social Contract and the Rise of Geopolitics you can so by CLICKING HERE. 

© 2014 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

UPDATE - KWN has many more interviews being released today.

The audio interviews with Rick Rule, Dr. Philipa Malmgren, Gerald Celente, James Dines, Michael Belkin, Dr. Paul Craig Roberts, Andrew Maguire, Art Cashin, Michael Pento, MEP Nigel Farage, David Stockman, and Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

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