24 October 2012 0 Comments

Federal Reserve Creating Money by Fiat — And No Recorded Inflation – An Illusion of Prosperity – “Pseudo-Wealth”

In my opinion, and the opinion of many economists, the pseudo-prosperity  created by Federal Reserve intervention, will not, and cannot, continue.

Since the financial crisis began in Aug. 2007, one of the puzzles surrounding the Federal Reserve’s quantitative easing program — i.e. money-printing — has been why it has not led to high levels of consumer price inflation minus food and energy.

In the past five years, the Consumer Price Index (CPI) minus food and energy has only increased by an average annual rate of 0.96 percent, even though the Federal Reserve has expanded its balance sheet by roughly $1.9 trillion since the crisis started at an annual rate of $469.7 billion.

 The late, great Milton Friedman once defined inflation as “too many dollars chasing after too few goods.” So, why has consumer goods and services inflation been low despite tremendous increases in the monetary base?    READ MORE  Why hasn’t the Fed’s quantitative easing led to high inflation? Robert Romano 19 October 2012

 

 

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