Post by RinsePrius on Oct 10, 2024 18:41:45 GMT
"Inflation is always and everywhere a monetary phenomenon”
This is the crux of monetarism, the Chicago School theory of monetary economics that Friedman is known for.
The idea behind monetarism is that if there is an inflation problem, it has a *monetary* cause, which invariably means the monetary authorities have printed too much money.
Let's put our monetarist hats on and see if we can investigate the causes of our current bout with inflation through the eyes of Milton Friedman, just as he would.
The first step would be to consider the recent history of the central bank and the changes in its balance sheet, which roughly translate to how much money and credit it is pumping into the economy.
www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm
When Trump entered office, the Fed's balance sheet was at 4.5 trillion and when Trump left office it stood at 7.4 trillion. That's a 65% growth rate.
When Biden entered office, the Fed's balance sheet was 7.4 trillion and it grew to a peak of 8.96 trillion in April 22. That's a 21% growth rate.
In 2024, after the Biden regime has pursued a laissez faire policy with regard to the Fed (said nothing while the central bank raised interest rates and attacked inflation) the Fed's balance sheet has shrunk to 7.04 trillion, which is less than what it was when Biden entered office.
I don't know about you but this chart suggests to me uncle Milton would give Trump a big ole wag of the finger.
21 is less than 65.
Trump and MAGA blaming Biden for inflation is ironic, the folks who caused the crisis are blaming the people cleaning it up.
Typical.
This is the crux of monetarism, the Chicago School theory of monetary economics that Friedman is known for.
The idea behind monetarism is that if there is an inflation problem, it has a *monetary* cause, which invariably means the monetary authorities have printed too much money.
Let's put our monetarist hats on and see if we can investigate the causes of our current bout with inflation through the eyes of Milton Friedman, just as he would.
The first step would be to consider the recent history of the central bank and the changes in its balance sheet, which roughly translate to how much money and credit it is pumping into the economy.
www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm
When Trump entered office, the Fed's balance sheet was at 4.5 trillion and when Trump left office it stood at 7.4 trillion. That's a 65% growth rate.
When Biden entered office, the Fed's balance sheet was 7.4 trillion and it grew to a peak of 8.96 trillion in April 22. That's a 21% growth rate.
In 2024, after the Biden regime has pursued a laissez faire policy with regard to the Fed (said nothing while the central bank raised interest rates and attacked inflation) the Fed's balance sheet has shrunk to 7.04 trillion, which is less than what it was when Biden entered office.
I don't know about you but this chart suggests to me uncle Milton would give Trump a big ole wag of the finger.
21 is less than 65.
Trump and MAGA blaming Biden for inflation is ironic, the folks who caused the crisis are blaming the people cleaning it up.
Typical.