Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coordinate the separate actions of different people in the same way as subjective values help the individual to coordinate the parts of his plan.

—F.A. Hayek

F.A. Hayek explained how tacit knowledge of every single subjective valuation exists in the minds of the whole populace-- and through a price system people express this knowledge. This creates what he called spontaneous order to plan society, superior to any central planning.

The Federal Reserve’s Federal Open Market Committee (FOMC) raised the target federal funds rate 75 basis points on Wednesday, marking the fourth 75-basis-point hike in a row since June. 

The federal funds rate is now the highest it’s been since December of 2007 when the Fed was in the process of lowering the target rate as part of an effort to stimulate in the economy in the lead up to the 2008 financial crisis. The target rate still remains 1.25 percent below the peak rate of 5.25 percent reached during much of 2006 and 2007. 

On July 8 this year, UK prime minister Boris Johnson resigned as Conservative Party leader after a Cabinet revolt over a series of ethics scandals had made his position untenable. A leadership election was then set in motion to allow party members to elect the next party leader who would succeed Johnson as PM.

The front door opens in a rush of air, followed by the muffled patter of shoe-less feet racing across the threshold and up the stairs. A mother seated at the kitchen table calls out, “Are you all done outside?” A chorus of yeses returns from the second floor. The mother smiles and returns to her work.

Price inflation and the resulting business cycles are monetary phenomena, and without increases in the money supply—i.e., monetary inflation—there is no price inflation. If the world were a very simple place, we would see this relationship clearly displayed: when the money supply increased, we would also see a general increase in prices soon thereafter.

Seven months ago I published the article: Will You Buy the Dip? I concluded:

Whether it’s this year, the next, or some time beyond, there will be an event, such as the return of COVID, WW3, the next Lehman Brothers, anything really, to blame for the next stock market crash. Eventually, the Fed will find a reason to officially re-enter the market.

Telling readers (free of charge):

China’s investment in scientific research and technology intimidates U.S. officials who fear that the former’s emergence as an innovation powerhouse could eclipse America’s dominance as the leader in cutting edge innovations.