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Peter Schiff Shared: Powell blames inflation on supply and demand imbalances caused by the pandemic. But it’s the Fed not Covid that’s creating all the money that consumers are spending. Since the Fed is responsible for higher demand, by Powell’s admission it’s also responsible for high inflation!
Community Response: Powell is right. Peter watch Eurodollar University with Emil Kalinowski and Jeff Snider. They destroy your inflation story with a historical study from the 40’s. It starts at 150a. Also watch the ep 65 Making Sense for a true understanding of why we went off the gold system.
The problem though is that their thesis relies on the concept that the bond market is able to sniff out inflation in the future. Where were they a year ago? A year ago, buy a ten year and 1 year in and the other 9 less taxes and you lost.
It’s both Peter imho. More currency printed out of thin air chasing fewer goods and services.
The core driver of inflation is the excess supply of money that most of us have ZERO access to. Secondary issue is the supply chain disruptions that may or may not be done intentionally.
Using your example, it seems since there is more money chasing fewer goods, the 1st-order effect is the more money in the system (monetary supply expansion). Right? Bitcoin is the solution.
I mean theoretically it would be both but that isn’t necessarily accurate. The supply chain slowdown once people started consuming more has a much larger weight than the increased money supply. It costs more to get the goods for businesses this they pass the increased cost to us.
What happens if you hyper inflate the money supply but make it available only to the richest of the rich and the most well connected?
Umm you still make money cheap, but only people who have access to be not affected.
(1/2) Since everything we consume is either raw energy or an energy derivative, Dollars are “claims on energy”. Money velocity aside, .A. printing additional “Claims on energy” (dollars) without increasing energy, is inflationary. B. Maintaining static “claims
(2/2) on energy” (dollars)- while energy is on the decline, is inflationary. C. Printing additional “Claims on energy” (dollars) while energy is decreasing, is (a double whammy-say hello to today) uber inflationary.
Amazing with all the demand for gold, gold didn’t go up in price.
Yes strange! Or is it the Fed defending the Dollar? Keeping gold price down?
‘‘It’s the Fed not Covid that’s creating all the money that consumers are spending”
Maybe I’m wrong but Money Velocity at its lowest.
Debt is priced in USD; emerging economies would default and then you would really have to worry about inflation. The fed is bailing out the world. What have you done lately?
I really don’t know why you put consumers on the bad side. Creation of money is made by banks after all. Consumers and workers are the victims here. Nowadays debt is created where there is no risk according to banks.
The problem is this: risk is important and necessary in any economy. The FED misjudged its liquidity measures but I agree with you that it is partly responsible for the rise in prices. Beside its role and responsibility are price stability and employment (and only that).
Responsible as much as the commercial banks and those who were able to borrow for free and without risk to create a financial and real estate bubble; which is not without risk.
As a reminder, the formula for calculating inflation is simple: quantity of money * speed of circulation. In any health crisis, it is normal to have a decrease in the speed of circulation: stakeholders assess their risk and store in case of a blow.
The various Central Banks took a dim view of this and started printing to maintain liquidity in the financial markets. The true question here is: Do any banker or politician knows how inflation works?
