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Money and Banks
Any economist should have been able to see that having the monetary spigot on full blast to “stimulate” would raise prices down the road. We are now down that road.
The idea that supply chain problems are “driving inflation” gets the causation backward. It’s money supply inflation that’s causing the supply chain problems, not the other way around.
The world of the 2 percent target is something truly new and worse than what came before. It’s not the same old monetary policy with slightly higher inflation targets.
There is need to realize that the economic policies of self-styled progressives cannot do without inflation. They cannot and never will accept a policy of sound money.
Central banks always and everywhere weaken economic growth by undermining the propensity to save; they are destabilizing the economy by fueling a debt economy.
The velocity of money does not have a life of its own. It is not an independent variable and it cannot cause anything, let alone offset the effect of increases in money supply on the prices of goods.
Policy normalization—defined as closing down the nonconventional toolbox and restoring a well-functioning price-signaling mechanism to the bond market—is difficult but possible.
It is not possible to replace productive credit by means of the easy monetary policies of the central bank. If this could have been done, then the world would have already ended poverty.
It was government policies that kick-started the engine of financial innovation, wrongly blamed by many in the press and left-leaning academia for this increased economic instability.
Years of bubbles and malinvestment have a downside: the destruction of the productive, wealth-building parts of the economy. And that could mean higher interest rates.