• About
  • Team
  • Contact
  • Editorial Standards
  • Core Values
  • Terms of Service
  • Privacy Policy
  • Affiliate Disclosure
Resist the Mainstream
No Result
View All Result
STORE
  • Politics
  • US
  • Media Watch
  • World
  • COVID
  • Story of Hope
  • Opinion
    • Cartoons
NEWSLETTER
Get Ad-Free Login Manage Account
  • Politics
  • US
  • Media Watch
  • World
  • COVID
  • Story of Hope
  • Opinion
    • Cartoons
No Result
View All Result
Resist the Mainstream
No Result
View All Result

Economist That Correctly Predicted Inflation Issues Yet Another Prediction

RTM Staff by RTM Staff
July 8, 2022
0

RELATED

Sen. Kennedy Surprises Mayorkas by Interrupting Testimony for Shoulder Pat, Handshake After Tense Exchange

Watch: Lawmakers Get Into Hallway Shouting Match Over Gun Violence as Democrat Calls Republicans ‘Cowards’

While the hundreds of economists employed by the Federal Reserve were apparently blindsided by the current wave of inflation, there were economists who got their predictions right. Not only have they got the overall inflation number right, but they also explained why so many others got it wrong.

ADVERTISEMENTS
ON
OFF

Based on their calculation, they expect inflation to continue, though somewhat diminished, for perhaps two more years.

Advertisements

“At the end of this year, I don’t see how inflation … can be less than 7 percent,” said one of the economists, Steve Hanke, during a recent Wealthion interview.

At the end of 2023, he expects the inflation to stay elevated at about 6 percent, year-over-year.

Hanke, professor of Applied Economics at Johns Hopkins University, and John Greenwood, chief economist at Invesco in London, predicted last July that the U.S. Consumer Price Index (CPI), the most popular measure of inflation, would reach at least six percent and as much as nine percent by the end of 2021. The CPI was up 7 percent in December, year-over-year, and hit a four-decade high of 8.6 percent in May.

A lot of economists and politicians, including Fed chair Jerome Powell and President Joe Biden, have blamed idiosyncratic phenomena such as supply chain disruptions and the Ukraine war for the inflation.

These factors are secondary, according to Hanke.

“This is an old game with the White House and the Fed trying to cover their tracks,” he said in a May interview with Larry Kudlow, former economic adviser to President Donald Trump.

Advertisements

It’s true that the pandemic and the related lockdowns have disrupted supply chains. People spent much less on services and much more on tangible goods, which hiked demand for commodities, manufacturing, and shipping. As a result, prices of goods have appreciated much more than those of services.

It’s also true that the Ukraine war and sanctions imposed on Russia for its invasion have disrupted the oil and grain markets.

But such disruptions should only affect prices in select areas of the economy and only for a limited time. If prices rise across the board, it must be that too much new money has been printed, Hanke has argued.

“There is only one cause underlining it all and that’s an excess amount of money that’s been created,” he said.

He and Greenwood have used the analogy of a “monetary bathtub.” The water in the tub is the number of dollars newly printed by the Fed. There are three “drains”: One is the expansion of the economy. If Americans produce more goods and services and the total amount of money stays the same, prices should go down.

A certain amount of new dollars thus offsets such a price decrease. Another drain is the change in the velocity of money, which means how fast is money changing hands in the economy. In recent decades, there has been a growing trend of holding dollars, which decreases the velocity and thus offsets a certain amount of newly printed dollars. Everything else manifests as inflation.

This is an excerpt from The Epoch Times.

Scroll down to leave a comment and share your thoughts.

TRENDING TODAY

Police Chief Reveals Nashville Shooter Audrey Hale Had Another Target in Mind
US

Police Chief Reveals Nashville Shooter Audrey Hale Had Another Target in Mind

by RTM Staff
March 29, 2023
Autopsy Results Revealed for Death of Georgia Dad Found Rolled in Carpet
Politics

Autopsy Results Revealed for Death of Georgia Dad Found Rolled in Carpet

by Gary Ray
March 29, 2023


© 2023 Resist the Mainstream

Get Ad-Free Login Manage Account
No Result
View All Result
  • Newsletter
  • Store
  • Politics
  • US
  • Media Watch
  • World
  • COVID
  • Story of Hope
  • Opinion
    • Cartoons
  • About
  • Team
  • Contact
  • Editorial Standards
  • Core Values
  • Terms of Service
  • Privacy Policy
  • Affiliate Disclosure

© 2023 Resist the Mainstream