Perfect Time To Review What Is, And What Is Not, Inflation (And Why It Matters So Much)

It’s costing more to live and be, so naturally, people are looking for who it is they need to blame. Maybe figure out some way to stop it. You know and feel for the basics since everyone’s perceptions begin with costs of just living. This is what makes the subject of inflation so difficult, even more so in the era of QE.

Money printing, duh.

By clarifying the situation – demonstrating over and over how there is no money printing therefore there can’t be inflation – we aren’t saying that prices aren’t rising. They obviously are. But by dispassionately analyzing the situation given its clear lack of any monetary basis, what we are doing is pointing out what instead must be responsible for driving costs of living higher.

And what that means for the future.

If it isn’t money – it’s not – then that changes the entire macro picture. These price pressures should be temporary given what’s not actually behind them. They are already proving to be as another monthly CPI rolls in and quite predictably it’s nothing like those from earlier in the year (only a few months ago).

The annual rates of change are similar, though monthly rates have diminished back to the disinflationary paces of the pre-COVID period. And even the annuals are topped out, many of the indices peaking back around April and May, June at the latest.

The BLS today said the overall CPI gained 5.39% (unadjusted) in September 2021 when compared to September 2020. A small bit faster than August’s 5.25% with oil prices moving higher, yet equal to June’s likewise 5.39% and not that much different from May’s 4.99%. No more huge acceleration.

The core rate increased by “only” 4.03% year-over-year last month, just a touch quicker than the 4.00% in August yet down from June’s high of 4.37%. The monthly changes better display just how this really is establishing “transitory” (below).

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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