Everyone needs to grab their wallet, things are about to become even more expensive than they are today. Via Larry Kudlow:
It used to be hypothesized that low inflation was the key to high economic growth. For everybody in the economy, low inflation was a tax cut. Conversely, rapidly rising prices were thought to penalize the economy by placing a tax-hike effect on investors, businesses, and families. It was this logic that spurred Paul Volcker (especially) and then Alan Greenspan to labor mightily in the 1980s and 1990s to bring inflation down.
The Fed’s favorite inflation measure — the personal consumption deflator — has risen about 1 percent over the past year, as has the consumer price index. When I grew up professionally in the 1970s, first as a New York Fed staffer and then as a Wall Street economist, no one — and I mean no one in their right mind — would ever have dreamed that double-digit inflation could be brought down to 1 percent. But Janet Yellen is now telling us that low inflation is a sign, and perhaps even a cause, of the weak economy.
The Wall Street Journal headline last week was “Fed Shows Growing Worry about Low Inflation.” As the narrative unfolds, both the Federal Reserve and the IMF blame low inflation for small wage gains, excess business capacity, and soft global demand.
Not for one nanosecond should anybody believe this nonsense.
Kudlow is being charitable by ascribing altruistic motives to Chairwoman Yellen (and by extension our ‘Leaders’ in Washington).
“You know, we need to do something about the weak economy and high unemployment…”
In reality, politicians in Washington want high inflation to facilitate spending more money without raising taxes to pay for the spending. Furthermore, creating inflation also allows politicians a clever way to avoid accounting for the full amount deficit spending they are engaging in.
Milton Friedman explained this nicely way back in 1978:
Friedman really hit the nail on the head how “we the people” are complicit in this. Well, not all “we the people.“