Prices of goods and services in the economy seem to be going through the roof, and both consumers and producers suffer from the falling value of their money. Unfortunately, the public turns to politicians in Washington and economists around the world for answers.
On Wednesday, March 16, 2022, the US central bank, the Federal Reserve System, raised the target for the federal funds rate by 0.25 percent, to 0.50 percent. According to Fed officials, the increase in the federal funds rate target was in response to the strong increases in the yearly growth rate of the Consumer Price Index (CPI), which stood at 7.9 percent in February against 7.5 percent in January and 1.7 percent in February of the year before.
Recently, many industrialized countries such as the United States and the euro area have experienced high and further rising inflation, whereas in Japan and Switzerland inflation has remained low. While inflation reached 5.9 percent in the eurozone and 7.9 percent in the US in February 2022, Japan and Switzerland reported 1.0 percent and 2.2 percent, respectively. Since the turn of the millennium, the average year-over-year inflation has been 0.1 percent in Japan and 0.4 percent in Switzerland, compared to 1.7 percent in the eurozone and 2.2 percent in the US.
Readers of Murray Rothbard’s articles and speeches on war collectivism will immediately recognize the progressive pietist fervor surrounding today’s progressive war jingoism: everywhere is Ukraine! The atavistic need to analogize today’s situation to 1938, with Vladimir Putin as Adolf Hitler and war skeptics as Neville Chamberlain at Munich, is proof of this.
Last July when a team of White House economists issued their analysis of the predicament the US economy was mired in, the historical parallel they landed on was the immediate years following the Second World War. In their telling, it was similar supply shortages and pent-up demand that was causing all the inflation. Once resolved, a golden age of 1950s good growth and low inflation awaited.
