As the Biden administration continues to pitch its insane trillions-for-socialism bill, administration officials are deeply invested in obfuscating the inflation that confronts us now. This obfuscation follows their exhaustion of the possibilities of denial in the repeated proclamation that it was just one of those (passing) things. It may be helpful to advert to Milton Friedman’s axiom: “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
Earlier this week Steve Hayward drew attention to former Federal Reserve Board member Kevin Warsh’s Wall Street Journal column “The Fed Is the Main Inflation Culprit.” Warsh usefully addresses the attribution of our current inflation to supply chain issues:
“Supply-chain bottlenecks” is the popularized rationalization for the surge in prices. But the supply-chain story sheds more shade than light. Consumer prices are higher because prices are rising at the points of production, assembly and transportation. This is a description of the state of affairs, not its source. The Fed’s inertia in withdrawing extraordinary monetary policy—amid full employment—is the proximate cause of surging prices.
Warsh appeared on Larry Kudlow’s FOX Business show to discuss his column (video below). I have also found Lyn Alden’s March Quillette column The risk of inflation” a useful if nightmarish backgrounder.