Today we are taking a break from interviews and focusing on the global economy. Once a month we stop and look at what is going on - to borrow the song title from Marvin Gaye.

Although today's show is a lesson about monetary policy in the United States, the example works for almost every country in the world. As the world becomes more interconnected, the same philosophy drives decision making in London, Brussels, and Beijing.

If you take every country in the world and look at monetary policy since the Great Recession of 2008-2010, they printed and added $35 trillion dollars to the global money supply and that represents 50% of the world's GDP ($85 trillion). Since the root of inflation is the over-printing of money, which devalues the purchasing power of a currency, that money must be extracted from circulation.

Why is it a problem?

Because when you distort the value of a currency, you distort prices. If a currency is inflated, the prices of all products and services, by definition, must be increased. Since any market that operates on some market basis uses price as a signal to produce more or produce less - you create artificial stimulation. The increase in price is a signal to produce more if you are in a market or to jump into a market. This usually turns into a disaster for those companies that act on price signals - and we all do.

This sounds complicated, but it really isn’t.

EPISODE 21: Our Distorted Economy The essence of the problem is that there are VERY TRUE market economies, economies that would be considered capitalist. Today, most economic models are a blend of capitalism, state corporatism, and modern monetary theory. This is a witch brew that will lead to economic devastation globally.

Topics: Will this lead to a global recession? (Destruction of the dollar as a reserve currency, high price for energy due to policy, the inability to reduce the money supply) How long will the recession last? (government action distorts the business cycle, 18 months at least instead 6-8 months, ) What should governments do to solve the problem? (bring down inflation by reducing the money supply, accurately measure inflation - it is not a social construct, dealing with sovereign debt, abandon a central planning mindset)