Fed Chair Powell Says Price Inflation Arises From Shortages Not Monetary Policy

Then Explain This, Jerome Powell

Federal Reserve Chairman Jerome Powell takes care to repeatedly state in his appearances that price inflation in the economy arises solely due to shortages.

Powell has also stated that the Fed does not consider growth in the money stock when the Fed sets monetary (i.e. currency) policy (see: https://www.youtube.com/watch?v=fVSmA30qWu0&t=1090s ).

Below we can see the Consumer Price Index for All Urban Consumers (CPI-U) that is the favorite cost of living measure of the Fed.

The CPI-U Index has risen from 40.7 in August 1971, when the US defaulted on gold redeemability of the Dollar, to 313 today.

Ignoring former Treasury Secretary Larry Summers stating the cost of living is rising at 2x the Fed’s fudged figures (see: https://jensendavid.substack.com/p/former-us-treasury-secretary-says) , we can see the Fed’s measure of prices have risen even during times without widespread goods shortages in the economy.

If shortages exclusively drive prices higher, as during the 3 year COVID fright, where were the shortages that drove prices higher the other 95% of the time?

Consumer Price Index for All Urban Consumers (CPI-U) 1945 to Present

Here is the M2 Money (currency) Stock from 1959 to present:

M2 Money (currency) Stock 1959 to Present

The Fed would have us believe that its currency debasement does not drive goods prices and the cost of living in the economy.

If you think the Fed and other central banks are acting with willful blindness on this and that their actions threaten the buying power of the currencies they are explicitly and implicitly mandated to control, consider buying silver and gold bullion.

Best regards,

David Jensen