Persistent inflation is not a coincidence. It is a policy.

The money supply (M2) has bounced to March 2023 levels and has been rising almost every month since October last year. Furthermore, US government deficit spending has more than offset the decline in the Federal Reserve balance sheet. While the Fed’s balance sheet has shrunk by $1.5 trillion from its peak, the US government deficit remains above $1.5 trillion per year.

The money supply (M2) in the United States has bounced above March 2023 levels, while deficit spending offsets any Fed balance sheet reduction.

The Fed’s preferred inflation measure rose 2.8% in March from a year ago. This is the core personal consumption expenditures price index, excluding food and energy, which should be less volatile than the consumer price index and a better indicator of the real process of disinflation.

This figure is not only concerning, considering the propaganda that repeats that the fight against inflation is nearing its conclusion, but it becomes even more so when we observe the upward trend over the last three and six months. Inflation has accelerated on a quarterly and half-year basis.

Weaker Growth and Higher Inflation. Why Consensus Was Wrong.

The weak GDP figure for the first quarter came with a double negative. Poor consumer spending and exports, plus a rise in core inflation, The US administration’s enormous fiscal stimulus, underscores the importance of considering the weaker-than-expected data.

A deceleration in consumer spending, a decline in the personal savings ratio to 3.6%, and poor exports added to a set of figures for investment that were also negative when we looked at the details.

Inflation is no coincidence. It is a policy. Governments, along with their so-called experts, attempt to persuade you that inflation stems from anything other than the consistent, albeit slower, rise in aggregate prices year after year. Issuing more currency than the private sector demands, thus eroding its purchasing power and creating a constant annual transfer of wealth from real wages and deposit savings to the government.

Oil prices are not a cause of inflation but a consequence. Prices increase as more units of the currency used to denominate the commodity shift to relatively scarce assets. Therefore, oil prices do not cause inflation; they are one of the signals of currency debasement. Furthermore, if oil prices caused inflation, we would go from inflation to deflation quickly, not from elevated inflation to slower price increases.