Inflation

While President Joe Biden's White House continues to give happy talk about the economy, some major economic storm clouds are brewing. The future does not look good.

Considering the bond yields have only risen slightly, and that monetary overhang from covid is still huge, it’s difficult to be remotely confident that monetary conditions have been tight.

A recession looks more likely every day, and the latest sign of this is slowing price growth in producer prices. After all, price inflation usually slows as the economy weakens and consumers run out of easy money.

Politicians and the media are blaming businesses for inflation when, in fact, the skyrocketing prices of nearly everything have a government stamp on them.

Inflation at an annual rate of 5 percent is not a positive, and it is certainly not falling prices. Inflation is accumulative, and this means we are becoming poorer faster.

Government interference into money creation and production harms the economy in a number of ways, including skewing the organization of division of labor.

These days, the Fed and Chairman Jerome Powell are claiming the title of "inflation fighters." The more appropriate moniker should be "inflationists."

As Murray Rothbard wrote, inflation is not an increase in prices. It is, instead, an increase in the supply of money in circulation. The distinction is important.

When consumer prices shot up after the massive monetary injections undertaken to counteract the job-killing Covid lockdowns, the political classes called it "price gouging." Indeed, when government inflates, we need all the price gouging we can get.

Government and monetary authorities claim that the worst of the postcovid lockdown disruptions are past and a "return to normal" is just around the corner. It will be a very long corner.