Still Think The Fed Isn’t Fueling Inflation?
by Charles Hugh-Smith
ZeroHedge.com
05/30/2014
Just as we can’t eat iPods, we can’t subsist on official reassurances that the Fed and inflation are both benign.
There is a great divergence between the conventional financial media and the public who goes to the supermarket: the financial media swallows whole the official artifice that inflation is near-zero while J.Q. Public sees his/her grocery costs, health insurance, etc. rising by leaps and bounds.
Many observers finger the Federal Reserve as the villain in the inflation story: it’s all well and good to conjure up a few trillion dollars to pass out to your banker buddies, but there are always costs, recognized or not, to every action, and the Fed’s credit creation and numerous quantitative easing operations have greatly expanded money supply.
All else being equal, a massive expansion of money typically causes inflation, as the flood of new money starts chasing goods and services that haven’t expanded at the same high rate as money supply.
One camp reckons the reason why inflation is muted is that the Fed largesse has flowed into asset bubbles rather than goods and services, and proponents of this view make a good point: since little of the Fed largesse has trickled down to the to bottom 99.5%, it can’t exerting much pressure on consumer prices. In effect, the price pressure is all in equities and rentier assets such as real estate rather than in goods and services.
The Rest…HERE
