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Are we really experiencing inflation?

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Published: 26 Sept 2021 › Updated: 26 Sept 2021Are we really experiencing inflation?

Are we really experiencing inflation?

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The price of consumer item X going up does not cause inflation. Neither is it proof of inflation. It's just one item with any number of possible causes for the price increase. And as economists say, never reason from a price change.

The price of all consumer items going up also does not cause inflation. It IS inflation. And it is caused by too much money in the economy. It's impossible to have a general price increase otherwise, because people have limited spending power - when they spend more on item X they have to spend less on Y. As less of Y gets bought, the price has to come down.

In other words, inflation is caused by the Federal Reserve (in the US) pumping up the money supply, say through years of quantitative easing.

I don't yet know for sure that we're having real inflation in the US, but it's increasingly looking like it.

I do know that Biden has no clue what he's talking about, nor do 90% of the journalists writing about this (remember the Gell Mann Amnesia Effect).

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