Dry Tinder at the Fed

by Warren C. Gibson
The American Institute for Economic Research

The Federal Reserve System has indirectly increased the money supply (the M1 version) by a whopping 75% over the past year (I’ll call this money inflation, harking back to the classic definition), and yet there has been no price inflation to speak of (the contemporary definition). Inflation hawks have been driven back to their aeries, leaving the field clear for the newest version of monetary sophistry, so-called Modern Monetary Theory (MMT), which says in essence that governments who control the currency in which they borrow should feel free create all the money they want until such time as inflation ramps up.

[…] What’s going on here? Why was so much money created, where did it go, and why didn’t it ignite price inflation? If it’s such sophistry, why has MMT seemingly won the day?

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