How Inflationism Propagated Singapore’s Riots

Sovereign Man’s Simon Black Singapore eloquently explains of the unexpected recent outbreak of riots in Singapore.

Like individual people, societies have their own breaking points. They build up anger and frustration for years… sometimes decades. Then all it takes is one spark. One catalyst. And it all becomes unglued.

Just yesterday, a 33-year old Indian man got hit by the proverbial bus in Singapore’s Little India neighborhood. That was the catalyst. What transpired for the next several hours was a full blown riot… the first of its kind since 1969.

Several hundred rioters stormed the streets. They started off smashing the up the bus that was still on the corner of Hampshire Road and Race Course Road. Then they started throwing objects at the ambulance staff who were unsuccessful in extracting the man in time to save his life.

By the end of the evening, an angry mob had lit five police vehicles on fire, plus the ambulance, leaving the streets in a towering inferno.

The government immediately went into damage control mode trying to explain what happened. But the explanation is really quite simple.

Singapore has had years of tensions building. The wealth gap is growing like crazy. Wealthy people are becoming ultra-wealthy, while the majority of folks see the cost of living rise at an alarming rate.

Strong ideological and ethnic differences are boiling over. And backlash against immigrants, especially from certain countries, is becoming an acute and obvious problem.

These issues are commonplace. Ideological differences. The wealth gap and economic uncertainty. Immigration challenges.

They’re the same issues, for example, that have plunged much of Europe into turmoil, including the rise of a blatantly fascist political party in Greece.

And these same issues exist, in abundance, in the Land of the Free… where a number of serious ideological divides are becoming obvious social chasms.

Printing money with wanton abandon. Racking up the greatest debt burden in the history of the world. Doling out wasteful and offensively incompetent social welfare programs at the expense of the middle class. Brazenly spying on your own citizens. These are not actions without consequences.

And if it can happen in Singapore– one of the safest, most stable countries on the planet, it can happen anywhere. Even in a sterile American suburb.

It is indeed disappointing to see upheavals erupt in what has been ‘successful’ economies. Singapore is one place I would prefer as residence.

But riots have indeed been a manifestation of tensions building overtime.

Growing politicization of the marketplace, e.g. latest labor protectionism, compounds only to social tensions

As I wrote about Singapore’s gradualist transformation to a welfare state in August of 2012

Once the ball gets rolling for the feedback loop of tax increase-government welfare spending then Singapore eventually ends up with the same plagues that has brought about the current string of crises, particularly loss of economic freedom, reduced competitiveness and productivity, lower standard of living, a culture of dependency and irresponsibility and of less charity and unsustainable debt conditions. The outcome from politically instituted parasitical relationship would not merely be a financial or economic crisis but social upheavals as well.

Be reminded that all these massive money printing measures and zero bound rates has only been driving a deeper wedge between the beneficiaries—which really are disguised bailouts of banks, the political elite and their cronies and of the bankrupt governments—and the main street (from whom the transfer to elites has been sourced)

Singapore is of no exception. 

Singapore’s loan to the private sector has been exploding, it began its upside acceleration in 2006, but then the ascent has intensified since 2011. Today this has turned nearly parabolic

Singapore’s massive credit bubble has been reflected on her money supply M3 growth (red rectangle)

The credit bubble has found its way largely to the property sector where Singapore’s property index has already eclipsed the pre-1997 Asian crisis highs.

Populist politics, which always looks at the superficial, the “visible” or the symptom, blame this largely on immigration rather than central bank policies led by the US Federal Reserve and Singapore’s counterpart Monetary Authority Singapore (MAS). The MAS has been resorting to "containing” the rise of the Singapore dollar vis-à-vis the US Dollar by pumping a domestic credit bubble.

Popular clamor has thus spurred more and more interventionism that has only been inciting social tensions which paved way for the recent riot.

So it should be no surprise when inflationism will continue to provoke riots worldwide, even in places deemed as ‘safe’ or stable.  We have seen a similar outbreak of public turmoil in Sweden last May.

Here in the Philippines, today the media announced of a massive jump in electricity prices in the metropolis. This will not only prick local bubbles but will also provoke a public uproar via demonstrations and possible riots.

Bubbles just can’t last forever. Heed the prescient admonitions of the great Austrian economist Ludwig von Mises:

But the boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances.

Riots serve as the proverbial writing on the wall.