Today, the Bureau of Labor Statistics released CPI data. The BLS reports annualized inflation is running at 7.9%, a rate not seen in 40 years (see: BLS Economic News Release:. Consumer Price Index Summary).
Thanks 116th Congress and 117th Congress. Thanks Trump. Thanks Biden. Thanks Federal Reserve.
The number of bank credits in circulation in the form of US dollars and demand deposits (you do not think dollars are money, foolishly, do you?) has risen 111% since January 2020, but output, the number of products (goods and services), has not risen by 111% over the last two years. In January 2020, before Covid-19, total dollars in circulation and demand deposits were $3,344.6 trillion. By January 2022, that sum rose to $7055.6 trillion! That is a 110.95% growth in only two years!
There is only one way for prices to go under inflation (expanding bank credits) and that is upward.
It is little wonder that crude oil in the USA went from $59.10 in January 2020 to $77.85 in January 2022, before the Ukrainian-Russian Conflict went hot (see this right here on the True Dollar Journal: The Ukraine-Russia Conflict Has Pushed Prices of Oil Less Than What Media Would Have You Believe. What is the Truth?).
Bank Credits Versus Products
It is all rather simple: bank credits versus products
A rise on one side requires an adjustment in the other. So for example, if output rises under the same sum of bank credits, each bank must buy more product. Likewise, if bank credits rise while the output of products stay the same or falls (as in the case of lockdowns), prices must rise.
This is inescapable math.
Congresses under Trump and Biden borrowed and borrowed heavily. The Federal Reserve printed the bank credits by pressing keys on their keyboards buying the bonds sold by the U.S. Treasury. Congress then cut checks to everyone who applied for free-to-them bank deposits.
Some call it "quantitative easing." Others call it Modern Monetary Theory.
Bank deposits are credits. Money has not existed for nearly a century in the USA. Money were it to exist, would be coined metal by weight and fineness. Money always can exist without government or bankers. Bank credits require bankers. Legal tender requires lawgivers and their enforcers.
Heed my words: Prices are an effect and never a cause.
All prices are governed by the one true law for the whole of economics (economy, commerce): the Law of Prices. The Law of Prices holds that winning bidders of what is on offer set the price.
If winning bidders have more buying power, i.e., more credit, in the face of short-run fixed supply, prices must rise. This is inescapable.
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