EDITOR NOTE: If an increase in the money supply begins showing signs of a correlative impact in the price of goods and services, then as long as those goods and services are excluded from the Fed’s inflationary barometer, then the Fed can claim that no such inflation exists, or that an increase in the money supply has minimal impact on the rise of prices. There’s a saying that in certain contexts, what’s happening at the margins is far more important than what’s happening at the center. In this case, what is happening at the margins? Home prices are doubling, used car prices are up 36%, lumber is soaring, up 149%, copper is up 43%, and food prices, up 70%, are rising across the globe. Compare this with what’s happening at the center--the Fed’s area of focus according to its data: US Personal Consumption Expenditure Core Price Index YoY is only at 1.41%. Is the American public being gaslighted by the Federal Reserve?
The way that The Federal government measures inflation shows that there is little impact from the dramatic increase in M2 money supply. US Personal Consumption Expenditure Core Price Index YoY is only at 1.41%.
Yet a number of commodities and housing have increased along with the massive expansion of Federal Reserve M2 money stock. For example, used cars (Manheim US used vehicle value index) has increased 36% since December 31, 2019. Lumber has increased 149% over the same time period and copper has increased 43%. Home price growth has increased to 12% YoY, up from 6.6% for December 2019.
Yet the US Personal Consumption Expenditure Core Price Index YoY is only 1.41%.
Food? Up 70% since March 2019.
Since April, investors are seeking protection in the form of gold and silver.
Of course, there are droughts and weather events that impact food prices. And growing economies can drive up commodity prices. Then again, markets may simply be drunk on Fed money printing.
Original post from Confounded Interest