Here's the bar graph from the BLS for inflation this year. The official inflation rate, which every considers a joke, and far lower that "real world" rising prices, went up from 5.4% last month to 6.2% this month.
For years, The Fed was fighting to get inflation up to 2%, and couldn't. Their whole plan needs about 3% annual inflation to work at its best. Because of the pandemic, and the underlying economic crisis, The Fed created somewhere around $4 1/2 to $6 trillion in new money, increasing the money supply by about 35% in about 18 months. Guess what, as the history of inflation and hyperinflation tells us, a dramatically increased money supply creates inflation, beginning 12-18 months after the increase of the money supply, usually. Inflation showed up right on time, peaking out of its hole in March.
The Fed is still adding $105 billion to the economy this month, tapered down from $120 per month, for the past several months. The plan is to taper this amount down by $15 billion a month, so they're not adding anything, by about June 2022. They'll probably start adding money again at some point, when stocks crash again, and real estate starts downward. But we'll see.
The Fed has been saying "Inflation is transitory" since February or March, I believe. Yeah... inflation is about as transitory as Mount Rushmore. It's not going anywhere... but up, right now. We're going to have inflation, and probably MUCH higher inflation, through 2022, and very likely into 2023-24. It's not going anywhere. The monthly rate of inflation will vary up and down in time, but prices will keep rising for many months to come, overall.
Here's the M2 money supply chart. See that big surge up on the right? That huge increase in the money supply is where our inflation is coming from.
No comments:
Post a Comment