Monthly CPI has been within a whisker of that 12 times in the past 3 years.
I don’t have any strong evidence that it will stay that high.
But given that the Fed is expanding, and that some people think tariffs are inflationary . . . it might. It just might stay that high or even go up.
If it stays that high, inflation will be 4.91% in the coming months. Call it 5%.
—>Five percent is exactly two weeks (80 hours) of a standard 2000 hour full-time work year.<—
That 5% price increase is something I would call a “flat tax.”
Just like I’d call a 5% tariff a 5% flat tax, 5% inflation would have the same effect.
However several people here, and a lot of people in the media
have said that a 5% tariff would be regressive. (Because it is possible that the poor spend more of their income imports.) Well, the poor spend ALL their income on consumer goods so, if a 5% tariff would be regressive then 5% inflation would definitely be regressive as well.
Most people understand that inteerst rates and inflation are inverse to each other.
That is a true statement, but it only captures part of the picture.
It is more correct to say if moeny supply grows faster than real GDP, the result is inflation.
Most often, the measure of money supply used is “M2,” and it was M2 that Milton Friedman, the great conservative economist was referring to when he gave his famous quote “The money supply should grow at a constant rate roughly equal to the long-run growth rate of real output."
We can see from the blue arrow (the one on the green line)
during the Obama adminstration, and Trump 1.0, the Fed grew money faster than real GDP grew.
We can see from the red arrow (the one on the green line)
RIGHT NOW, the Fed is growing money faster than real GDP growing.
Any conservative economist will tell you “this is a recipe for inflation.”
In fact, when we place the two arrows side-by-side,
it turns out the Fed is ALREADY growing money at a faster rate
than it did during Obama and Trump 1.0.
This is already a recipe for inflation.
If the Fed cuts rate even further (as Donald Trump wants)
things are likely to get “inflatonier.”
Ultimately it is the Fed’s decision, but “higher for longer” would be my vote.
If the Fed didn’t keep buying more and more Federal Debt, the money supply wouldn’t artificially expand. Which means our government needs to stop spending so much to get money supply back in line with actual economic output.
Correct.
The Fed expands money supply (in 2 ways) “to accomodate” spending by Congress. The classic case is that when wars breaks out, governments cannot fund them through taxes of deficits alone. So they issue debt moments before printing money and buying it.
“It is no coincidence that the century of total war coincided with the century of central banking.”
– Ron Paul
“Inflation is a form of taxation. The government can raise funds by borrowing or taxing. But inflation is a method by which it can appropriate resources without openly levying taxes.”
– Ludwig von Mises
“Why did nations start central banks? To finance the materiel needs of the nation-state in time of war. There is no other answer to this question that is as nearly correct as that answer.”
– Brian Domitrovic
Understand, I meet no one’s defintion of a peacenik.
When we discuss US military issues I have been called a neocon, a paleocon, a war monger, a globalist etc..
My point was to show that these “printing money” measures have traditionally been reseved for extreme emergences, such as war.
It would be irresponsible to use such measures in response to a garden variety recessions. It is REPREHENSIBLE that our current government uses them to fund routine everyday operations.
