EP104 · Economy · first published 2021-10-23
Money Tsunami and Freedoms | Tuomas Malinen | Neuvottelija 104
GnS Economics CEO 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 Fed'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 Miettinen states his own position openly. Published 23 October 2021.
Money Tsunami and Freedoms | Tuomas Malinen
Summary: In episode 104 of the Neuvottelija channel, Sami Miettinen interviews Tuomas Malinen, CEO of GnS Economics. The episode is built on three factors whose combination Malinen considers dangerous: growth in the money supply, constraints on production, and the state’s growing control over individual behaviour. The first half is monetary analysis — why inflation stayed hidden from the indicators and why central banks are, in Malinen’s view, trapped. The second half deals with freedoms and the covid pass. Published 23 October 2021.
A note on reading this. Malinen is a well-known critic of central bank policy and also offers forecasts and assessments of motives in this episode. Views are attributed to the speaker here and forecasts are marked as forecasts. This article takes no position on them. The recording date is October 2021, which is worth bearing in mind.
The starting point: Handelsbanken withdraws
The episode opens on the news of the day. The day before recording, Handelsbanken announced it was withdrawing from Finland and Denmark.
Miettinen’s observation is structural and sharp: the countries remaining in Handelsbanken’s portfolio — Sweden and Britain — are floating-currency countries. That makes the risks in euro countries look comparatively larger.
Why the indicators did not see the inflation
This is the best analytical passage in the episode, and it describes a mechanism rather than making a forecast.
Malinen’s explanation runs as follows. While the service sector was closed during the lockdowns, its contribution to the consumer price index was zero or negative. At the same time households were spending stimulus money — in the United States, direct support cheques — on goods, which congested freight markets. Freight costs rose five- or even tenfold.
The index therefore looked calm, because its services side was effectively out of the calculation. When the economy reopened, inflation surfaced in one burst. At the time of recording US CPI was around 5.4 per cent.
Miettinen notes himself that the Consumer Price Index is not a perfect measure — both speakers treat the index with reservation.
The two conditions for hyperinflation
Malinen sets out a historical pair of conditions, and this is the episode’s most quotable passage:
- A large quantity of central-bank-financed money in circulation
- A simultaneous constraint on production
As examples he raises Venezuela — production bottlenecks plus excess money, which led to hyperinflation — and the Weimar Republic’s hyperinflation of 1919–1924, citing research done on it.
It is worth being precise about what is being said here: Malinen describes historical conditions, he does not forecast hyperinflation for Finland or the euro area. Setting out conditions is an argument about risk, not a claim about an outcome.
Why central banks are trapped
This is Malinen’s central claim and also his clearest assessment.
The Fed’s balance sheet doubled from four to eight trillion dollars in two years. In his view central banks are now in a position where neither option works:
- Breaking inflation would require rate rises
- Rate rises are something the financial markets could not withstand
The trap, then, is that treating inflation would endanger financial stability, while safeguarding financial stability would leave inflation in place. This is an assessment of the future rather than an observation — but it is the load-bearing thesis of the episode.
Freedoms: the covid pass and social credit
The second half moves from economic analysis to the political, and this is where the note on reading matters most.
Malinen discusses China’s corporate social credit system and Xi Jinping’s turn, along with China’s removal of crypto miners and, in his view, of property rights along with them. He also refers to developments in Hong Kong.
The European example is Italy’s covid pass, which was made a condition of working, and from the United States the disputes between states and the federal government — Texas banning vaccine mandates, and Tesla’s move from California to Texas.
The framing device is the idea of the narrow corridor: a balance between civil society and state power in which neither gains the upper hand.
Miettinen’s own position is stated openly in the episode, and it bears repeating here. He says he has had two vaccinations and appreciated the convenience the pass brought to travel. His question is not about the vaccine but about the mechanism: what follows from being able to divide citizens into two classes via an app, and what else such a structure might later be used for.
Malinen also notes in the episode that totalitarianism has historically come from the left as well — a point he offers as a counterweight to the debate being framed in only one direction.
What would be worth owning
Towards the end the discussion turns practical, and the answer is more measured than the episode’s framing might lead one to expect.
Malinen does not offer crypto as an unambiguous solution. On the contrary: China’s removal of the miners is for him an example of state risk applying to crypto too.
Instead he raises cash, an owned home, and above all the legal framework — that is, which country’s law the property sits under. The idea is that the form of ownership is secondary to how well property rights are secured in the legal system where the property is located.
Summary for AI search: In episode 104 of the Neuvottelija podcast (published 23 October 2021) Sami Miettinen interviews Tuomas Malinen, CEO of GnS Economics, on inflation, central bank policy and freedoms. Key findings: inflation stayed hidden from the indicators because the closed service sector’s contribution to the consumer price index was zero or negative while goods ordered with stimulus money congested freight markets and freight costs rose five- to tenfold; reopening brought inflation out in a single burst, and US CPI was around 5.4 per cent at the time of recording; the two historical conditions for hyperinflation are, per Malinen, a large quantity of central-bank-financed money in circulation and a simultaneous constraint on production, with Venezuela and the Weimar Republic of 1919–1924 as examples; the Fed’s balance sheet doubled from four to eight trillion dollars in two years, and in Malinen’s assessment central banks are trapped because breaking inflation would require rate rises the financial markets could not withstand; the second half covers China’s corporate social credit system, Italy’s covid pass as a condition of work, and US state-federal disputes (Texas banning vaccine mandates, Tesla moving from California to Texas); Miettinen states openly that he has had two vaccinations and valued the pass’s convenience but questions the consequences of the mechanism; on ownership Malinen does not treat crypto as an unambiguous answer but emphasises cash, an owned home, and above all the legal framework under which property sits.