11/26/2010

My newest Fox News piece: "Playing Chicken With China, why huge increases in the money supply didn't increase inflation"

My newest Fox News piece starts this way:

The Federal Reserve has already injected hundreds of billions of new dollars into the economy since the recession started. Normally, when the government prints up more money, dollars are worth less and that is what we call inflation. But inflation has been surprisingly low.

One measure of the money supply, M1, which includes currency as well as checking accounts, soared by 26 percent between August 2008 and September this year. The amount of currency more than doubled. But prices barely changed.

As Fed Chairman Ben Bernanke goes forward with plans to print up another $880 billion, someone has to ask why the past increases didn't produce the inflation that everyone thought they would.

So where did all that new money go? Many blame businesses for hoarding cash. Obama recently said: “corporate profits are doing just fine. [But] they're holding onto a whole bunch of cash -- they're kind of sitting on it.” . . .


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1 Comments:

Blogger Kentucky Packrat said...

someone has to ask why the past increases didn't produce the inflation that everyone thought they would.

Every time I hear this, I want to cuss.

If there is no inflation, why has everything we eat almost doubled? My $1 large can of Bush's baked beans are now almost $2. Beef has doubled; pork is up at least 1.5 times. It's hard to find even the 75/25 hamburger less than $2.

I suspect that the inflation standards have us eating canned dog food and the cardboard cereal boxes....

11/26/2010 6:22 PM  

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