"Inflation" Talking Points

I wrote this piece for two reasons.

The First Reason

The first is to alert new subscribers to my unique information regarding inflation. There is no charge for this subscription. I merely hope that you will read, study, and share the information. My objective is for you to be able to share this information in casual conversation.

And although my writings are presumed to be copyrighted, I hereby encourage everyone to take it, as is or adapted in some way, to be useful to educate others about inflation. For this I am owed no recognition or enumeration. Please use it for whatever good it might avail.

I am appalled that very few of our elected officials and very few of our accountants, doctors, attorneys, appointed department heads, teachers, newscasters, or business people understand inflation. And it’s not that I’m so smart. It’s just a subject—somewhat like the subject of exercise that I’ve spent most of life writing about—that seems to escape the logic of the mind for some reason I cannot ascertain. As anyone reads deeper into the materials that I provide, it is natural for many to be truly concerned that they have it fundamentally incorrect.

I have previously published my Substack articles to a small mailing list. Beginning with this article, I have enlarged the list about six times to include people who may no longer remember me. And it is natural that some of these contacts may not understand why I would send them such an article.

Well, this subject affects us all. And if it arrives unwelcomed, it is easy to merely unsubscribe. Just please note that it is the proverbial tip of the iceberg considering the several other articles available herein. And the uninitiated might do well to begin with the YouTube video, Ken Hutchins on Inflation… and then proceed to the supplemental articles resident on my Substack.

The Second Reason

The second reason for this article is to provide the following talking points for the subject of inflation. It includes topics that should encourage readers to question what they believe about the subject in hope that they will explore the provided resources. It also provides a convenient, pre-made reference for those who need this to write or talk about it.

• Inflation was first used to denote ONLY the expansion of the money supply. Since that correct usage in 1838, the meaning has been blurred and sometimes incorrectly used to denote the rise in prices from that expansion. We must adhere to the original definition to maintain a logical and consistent economics framework.

• Inflation is more particularly the expansion of the money supply with empty money—money not representing the production of goods and services. This money is the result of monetizing the federal debt, thus devaluing the money currency.

• Deflation is a myth. It is impossible to shrink the money supply and thus revalue the currency after the injection of empty money (inflation).

• The Consumer Price Index (CPI) does not and cannot measure inflation.

• The CPI is downstream from inflation.

• The CPI is not inflation.

• The CPI is exactly what it says. It is an index of price fluctuations.

• The CPI is affected by many factors. Inflation is only one of them.

• All the commodities on the CPI are affected EQUALLY by inflation.

• All the commodities on the CPI are affected UNEQUALLY by the non-inflation economic forces like gluts and scarcities.

• There is a delay of 18-30 months BETWEEN an injection of empty money into the money supply AND the prices rising on the street to change the CPI. The average delay is about two years. As such, there is no proximate cause.

• Gluts and scarcities often possess proximate cause, but rarely does inflation.

• Inflation probably cannot be measured.

• Inflation certainly cannot be reversed.

• Since attempts to reverse inflation are always unsuccessful, price caps and interest rate hikes only serve to damage the economy.

• The overwhelming majority of the price increases presently witnessed on the CPI are due to scarcities, not inflation.

• Production (demand-supply), as provable with the barter-only economy model,  does not meaningfully affect or effect inflation [Milton Friedman asserted that it was so little as to be not worth mentioning.], but does greatly affect the CPI.

Brace Yourself

Be surprised if you do not encounter stiff resistance to these assertions from among many of the millions of people around the world who have taken formal coursework in economics. They have been inculcated with the lexicon and framework of the prevailing dogma.

“The only function of economic forecasting is to make astrology look respectable.”—John Kenneth Galbraith