Rather than making money harder to get, the U.S. government needs to focus on the other side of the demand vs. supply equation.
In prescribing cures for inflation, economists rely on the diagnosis of Nobel laureate Milton Friedman: inflation is always and everywhere a monetary phenomenon—too much money chasing too few goods. But that equation has three variables: too much money (“demand”) chasing (the “velocity” of spending) too few goods (“supply”). And “orthodox” economists, from Lawrence Summers to the Federal Reserve, seem to be focusing only on the “demand” variable.
The Fed’s prescription is to suppress demand (borrowing and spending) by raising interest rates. Summers, a former U.S. Treasury Secretary who presided over the massive post-2008 bank bailouts, is proposing to reduce demand by raising taxes or raising unemployment rates, reducing disposable income and thus people’s ability to spend. But those rather brutal solutions miss the real problem, just as Summers missed the crisis leading up to the 2008-09 crash. As explained in a November 2021 editorial titled “Too Few Goods – The Simple Explanation for October’s Elevated Inflation Rates,” we don’t actually have too much consumer money chasing available goods.
Read the full article here.
Ellen - you were referenced in some comments in Third Paradigm. I write on medium and also have been thinking about food security and community resilience - my bias is soil health for a host of reasons.
Just published this article which you might find interesting. It was triggered by both the possible rail strike and the Fed’s likely future rate increases
https://symsoil.medium.com/the-war-on-inflation-is-about-to-get-ugly-response-to-robert-reichs-article-b7e729edb2a1
I could very well be wrong but my reading is that the Fed staffers, at least some, agree with you.
GLOBAL SUPPLY CHAIN PRESSURES, INTERNATIONAL TRADE, AND INFLATION
FRBNY Economic Research Staff Reports
Number 1024
July 2022
ME - After study of the effects of Four metrics addressing Goods-supplies and Trade barriers (SANCTIONS ??) on Inflation - this conclusion:
From the Abstract.
“”These lower trade elasticities in part reflect supply chain bottlenecks. These four results imply that policies aimed at stimulating aggregate demand would not have produced as high an inflation as the one observed in the data without the negative sectoral supply shocks.”” END
Seems more like Fisher than Friedman - Debt-deflation Theory of Great Depressions versus Inflation is Always a Monetary Phenom.
In a debt-based money system, raising the cost of money always raises the PRICE of EVERYTHING, except the INCOME needed to pay those prices (debts, etc.)
The Money Apprentice