We often assume that “numbers don’t lie.” The power of numbers is not necessarily attributable to the numbers themselves or what they represent, but rather in the inherent bias that we attribute to them. So, if someone were to give you a misleading calculation, then the numbers may not be suitable to the context, but they nevertheless are not “lying.” So what are we to say about the economic numbers that provide us critical information on the state of our economy? How accurate are the employment numbers, or inflation rate? Is our inflation near 2%…or are we closer to, say, 10%?
Just about every adult has a working understanding of “inflation.” But many don’t understand the underlying mechanisms behind it. How does it actually work; what creates it; why is it sometimes referred to as being “natural” or “artificial”; how does it circulate through an economy; and how can we notice it affecting our daily lives? Inflation is both a simple and complex concept. So if you feel you’re understanding is not quite up to par, here’s a good primer on the topic. An you can tell that the concept hasn’t changed much…considering that its a reprint of a 1951 article that still stands valid.
Sure, many countries are accusing the US of protectionist measures; imposing tariffs and other trade barriers. Of course, there’s some truth to this. But among those accusing the US, how many of them are actually innocent of the free market violations that are being hurled against us? It seems as if every week, we are hearing about more trade barriers imposed against the US—barriers that we weren’t even aware of…until now.
The economy seems to be improving. Sure, there’s pain due to the cost of living, gas prices, and tepid wage growth, but everyone seems not to mind it at all. It’s “mind over matter” or as BofA puts it inversely, “matter over mind.” It’s as if people believe that we are experiencing a “tepid economic utopia.” But like feeding Gremlins after midnight…whatever may come, its important for the Fed NOT to tighten its monetary policy. That would surely disrupt the status quo…and that last point is an understatement.
If you’ve been following financial pundits for some time, you surely have heard the accusations against the Fed for creating money out of thin air, or printing money, or running the presses. Former Fed chief Ben Bernanke outright denied it. Nobody can just go to a printing press and print more money. Of course, he’s denying the literal meaning of such a phrase. He’s certainly not referring to its implications. So hoe does the Fed do this magic trick? If you don’t already know, you might want to read this.
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