Bob Murphy over at Free Advice lays out the good news:
All consumer items except food and energy: +2.2%
All consumer items: +3.4%
Finished goods: +5.7%
Intermediate goods: +7.7%
Crude goods: +15.1%”
These numbers may not appear very remarkable, although they are over target, but the fact that there is price inflation at all in such a depressed economy should be alarming. Where is the recession in prices? Is this reminiscent of the disguised inflation of the 1920’s? The Fed has been fighting off corrections since the bursting of the Tech Bubble of the late nineties at least, steadily building and shifting the bubble from bank connected industry to bank connected industry.
And keep in mind that the Internet revolution greatly increased productivity and reduced costs (think of Walmart’s and Amazon’s supply chains, just to begin), so prices should logically have been falling during that period- at least assuming no or minimal money growth. On a gold standard mining would have increased, as the number of goods you could purchase with a weight of the metal would have increased, and so real resources would have been expended increasing the money supply in response to the increase in productivity, i.e. wealth. Though a “stable price level” is impossible by definition (which prices? of which goods? of what quality? which price relationships?), and not even unequivocally desirable (disguised inflation brought us the Great Depression and not the Great Recession), the gold standard is the best we’ve got this side of Eden for a predictable, steady , and rational monetary regime. And the amount of resources “wasted” devoted to “making money” are monumentally small potatoes compared to the waste and fraud of the current system.
image from dailycapitalist.com