Keynesian economists would have you believe that inflation is beneficial because it encourages spending which boosts demand and consequently stimulates the economy. But "Austrian" economists disagree citing the fact that inflation deludes the public into saving less than they would have normally creating malinvestment. In today's article, we are reprinting an excellent response by Paul Vitols to a Quora question on this very topic. ~Tim McMahon, editor Does Inflation Increase Economic Output? By Paul Vitols The word inflation is used by different people to point to different things. The best definition of it, in my opinion, is “a general and continuous loss of the … [Read more...]
Increasing Inflation Now Shifting Insurance Rates
Inflation is making everything more expensive, and insurance is no exception. As prices rise for goods and services, insurance companies have to adjust as well. They factor in a variety of elements, including the average cost per claim made and the rising costs involved in repairing cars or homes. When these costs go up, insurance companies must pass it on by raising the price of premiums. Understanding Insurance Inflation Insurance inflation means the cost of your car, home, health, or life insurance is going up. What’s driving these increases? For starters, healthcare expenses are rising, so health insurance gets more expensive. Natural disasters like floods and fires can also make home … [Read more...]
Can the FED Engineer a “Soft Landing”?
The ultimate dream of the Federal Reserve and those who believe in the FED's omniscience is for them to engineer a soft landing, i.e., curbing inflation without sending the economy into a deep recession. The idea is that if they raise rates just enough, but not too much, they can find the "Goldilocks" middle ground that will magically cool inflation just enough. In today's article, Mihai Macovei explains why that is more of a fairytale than Goldilocks herself. ~Tim McMahon, editor. There Is No Fed Magic Trick to Achieve a Soft Landing Economic growth in the United States accelerated to a 2.4 percent annualized rate in the second quarter of 2023, picking up from 2.0 percent in the first … [Read more...]
When Can We Expect Lower FED Rates?
Why Has The FED Been Raising Interest Rates? The Federal Reserve (Fed) started raising interest rates in March 2022 in an effort to combat inflation. As of the end of July 2023, the Fed's target rate limit is 5.5%, the highest level in 15 years. There are a few reasons why the Fed is raising interest rates so aggressively. First, inflation was at a 40-year high. In June 2022, the Consumer Price Index (CPI) rose 9.06% year-over-year, the fastest pace since December 1981. This means that the cost of goods and services was rising rapidly, which was eroding the purchasing power of consumers and businesses. Second, the economy is still strong. The unemployment rate posted a 50-year … [Read more...]
Everything They Tell You About Inflation is Wrong
In today's article, J.R. MacLeod looks at the effects of inflation, the fraud it perpetrates on the population, and who benefits and who loses from inflation. He also shows that "Inflation is not necessary for real wealth and real growth... inflation is completely unnecessary for a growing and prosperous economy". ~Tim McMahon, editor Inflation, the Price Level, and Economic Growth: Everything the Elites Tell You about It Is Wrong Fundamentally, inflation is fraud. The central government or bank printing more money lessens the value of the money already in circulation. A truckload of sand isn’t particularly valuable in Saudi Arabia. An increased supply of money means that ultimately prices … [Read more...]
Roots of Our Current Inflation
The government and the FED have been making lots of excuses for the current wave of price inflation but it hasn't occurred by accident, because of oil shocks, or Russian invasions. The foundation for the current wave of rising prices was laid brick by brick over a long period of time. And because of this foundation of debt, a severe financial crisis looms not far ahead. The following article by Antony P. Mueller was reprinted by Creative Commons Permission. ~Tim McMahon, editor 05/02/2022 A Deeply Flawed Monetary System A monetary system that allows the creation of money out of thin air is vulnerable to the fits of credit expansion and credit contraction. Periods of credit expansion … [Read more...]
How Families Are Adjusting To The Crazy Inflation Rates
On April 12th of, 2022, the U.S. Bureau of Labor Statistics (BLS) announced that the annual US inflation rate had reached a record high of 8.5%, a level not seen since December 1981. This level of rapid price increase is being felt all over the nation and even in Europe. Those with low incomes are having the hardest time adjusting to the rapidly increasing cost of living, as is often the case. But working families across the nation are also being forced to adapt and change in order to cope with rising prices. This has impacted every corner of our society, from gas to prices at the grocery store. Adjusting to this level of inflation hasn’t been easy, and here is how some families are looking … [Read more...]
How To Invest In Cryptocurrency: 4 Tips For Beginners To Get Started
Despite bouts of volatility that tend to scare away risk-averse investors, cryptocurrency is more popular than ever, with millennials hoping to cash in on its explosive growth. While legacy coins such as Bitcoin and Ethereum are still the most popular currencies in the world of crypto, other emerging altcoins are gaining momentum and popularity. If you have been living under a rock and have no idea where to get started in your crypto journey, keep reading to find four steps to get started: 1. Pay Attention to What You're Investing In In addition to having your finances in order, when investing in crypto, be mindful that, unlike stocks, most cryptocurrencies are not backed by any … [Read more...]
The History of Inflation in the United States
By John Steele Gordon Author, An Empire of Wealth: The Epic History of American Economic Power Money is just another commodity, no different from petroleum, pork bellies, or pig iron. So money, like all commodities, can rise and fall in price, depending on supply and demand. But because money is, by definition, the one commodity that is universally accepted in exchange for every other commodity, we have a special term for a fall in the price of money: we call it inflation. As the price of money falls, the price of every other commodity must go up. And what causes the price of money to fall? The answer is very simple: an increase in the supply of money relative to other goods and … [Read more...]
How Inflation Helps Some and Hurts Others
Inflation is NOT monolithic i.e. it doesn't affect everyone equally. This has been known since the 1700s when Richard Cantillon, an Irish-French economist, author, and banker, wrote a treatise explaining the Missippi Bubble and the Tulip Mania. We first discussed this issue in an article entitled Who Does Inflation Hurt Most? In the following article, Mark Thornton looks at the effects first postulated by Richard Cantillon and how inflation helps some and hurts others. ~Tim McMahon, editor. Cantillon Effects: Why Inflation Helps Some and Hurts Others By Mark Thornton We now turn our attention to what happens with an increase in the money supply rather than an increase in savings. … [Read more...]
