Inflation Worries Grow
The American public is increasingly worried about inflation.
Twenty-six percent of adults say that inflation is a bigger problem than unemployment, a poll by The Economist and YouGov shows. Twenty-one percent say unemployment is the bigger problem. Forty-two percent said both are equally as important.
The public also rates price level as the most important economic indicator. Forty-two percent say the prices of goods and services they buy are the most important economic indicator, followed by 25 percent who said unemployment and jobs reports. Ten percent said their personal finances are the most important and six percent said the stock market is the most important.
This is a big change. In January, just 24 percent told pollsters that the most important economic indicator was prices. Forty-two percent said unemployment and jobs reports.
The government will release its Consumer Price Index for June on Tuesday. Economists expect the pace of monthly price increases to tick down from 0.6 percent in May to 0.5 percent. CPI has come in hotter than expected for three months.
Former IMF Economist: America’s Inflation Is Beginning to Resemble a Latin American Country
Desmond Lachman, an economist and senior fellow with the American Enterprise Institute (AEI), told Breitbart News on Sunday that the U.S. is beginning to resemble a Latin American country given its inflation, government spending, and printing of money.
Government borrowing and spending — marketed as economic “stimulus” by its proponents — combines with growing government debt and expansion of the money supply to drive inflation, Lachman explained.
“The real reason that one should be worried about inflation is that there’s far too much stimulus in this economy,” he remarked. “We’ve got the largest peacetime budget stimulus that this country has ever known. We talk about something like 12-13 percent of GDP, which is a massive budget stimulus by any reckoning.”
He continued, “But on top of that, we’ve got the Federal Reserve that keeps printing money. … We are seeing the money supply now growing well over 20 percent [year-over-year]. If you look at the broad money supply, that’s the fastest money supply [expansion] that we’ve seen in many, many years.”
Lachman spoke with Reuters last month, when the outlet reported on the Federal Reserve’s unprecedented printing of money:
Money supply — which measures outstanding currency and liquid assets — rose 12% year-over-year in April, according to The Center for Financial Stability’s Divisia M4 index including Treasuries.
The measure has been running between 22% and 31% each month since April 2020, fueled by unprecedented economic stimulus from the Federal Reserve and U.S. government. That compares with annual growth of around 3-7% that was common from 2015 to early 2020.
He concluded, “Milton Friedman’s argument — which is widely accepted — is that inflation is everywhere a monetary phenomenon, So if you’ve got this rapid rate of money growth, you should be expecting that this inflation isn’t transitory. This could be here for awhile.”
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