Is inflation back?ITEM: In her published release on May 24, 2004, Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. Writer Jeannine Aversa offered: "In its latest economic outlook, the National Association for Business Economics estimated that inflation, as measured by the Consumer Price Index, will rise by 2.5 percent in 2004." She then attributed the overall rise in prices to increased costs for energy and steel. AHEAD OF THE CURVE: Until relatively recently, the American people An American people may be:
prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. some sources including Federal Reserve Chairman Alan Greenspan Alan Greenspan Dr. Greenspan is Chairman of the Board of Governors of the Federal Reserve System. Dr. Greenspan also serves as Chairman of the Federal Open Market Committee (FOMC), the Fed's principal monetary policymaking body. , the great fear was no longer inflation but deflation. Just last year, the Wall Street Journal, in its May 19, 2003 issue, published a story headlined: "Having Defeated Inflation, Fed Girds for New Foe: Falling Prices." The Journal noted that inflation had hit a 37-year low and agreed with Greenspan's assessment that the remedy to deflation was inflation. In truth, inflation had never ceased to threaten the American economy, a point we emphasized in our June 30, 2003 article entitled "Deflating the Deflation Myth." Inflation had not gone away because the Fed had not put the brakes on money creation, and inflation--properly defined--is an increase in the money supply. It is not rising prices, which is an effect of inflation. More currency results in lessening the value of all currency, thereby forcing sellers to ask for more of it in return for goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. . In "Deflating the Deflation Myth," we pointed out that "the money supply has risen $67.6 billion, or 9.6 percent, since one year ago," and that "by pumping up the money supply, the Fed forces prices to rise...." We also asked: "Will Greenspan's call for accelerated inflation [supposedly to fight deflation] be disastrous?" And we answered: "Yes, for the purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. of our dollars." It is not surprising that prices are rising at a faster rate than in the recent past. They will, in fact, accelerate--unless we return to a sound monetary system, denying the government the ability to inflate inflate - deflate . |
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