The huge amounts of monetary inflation of 2020 have indeed been translated into price inflation in 2021. Yet with the Fed now poised to slow things down, we might find asset inflation could suddenly go into reverse.
Easy money monetary policy only serves to weaken and destroy savings and investment. And that means weaker future economic growth.
The demand for money is key in exchange rates and a major factor in the exchange rate is the relative change in the growth of respective money supplies.
We're told they're hawks now, but the Fed is still thinking the way it has thought for the entirety of the twelve years since 2009, when today’s QE experiment began.
The classical gold standard brought the rise of central banks and state-imposed monetary "standardization." This set the stage for later monetary disasters.
If the private sector does not accept a currency as a general means of payment and a store of value, the currency becomes worthless and ceases to be money. Ultimately, it becomes useless paper.
The Fed may slow or eliminate new bond purchases but is not planning to sell. Meanwhile, producer prices have skyrocketed and Americans are consuming more but producing less. Get ready for entrenched price inflation.
It took many centuries for regimes to secure the sort of prestige and power necessary to claim a monopoly over money. From the state's perspective, it has been worth it.
Deflation empowers the citizen by allowing her modest savings to purchase more goods over time. Inflation empowers the state by reducing the size of its enormous debts in real terms—and through the inflation tax.
The Bank of Canada's stated mission is "to preserve the value of money by keeping inflation low and stable." Yet, the BOC works to inflate away the value of Canadians' purchasing power every single day.
