Our state economist had a perfect explanation for inflation last week. WLBT reported:
Inflation has gone from bad to worse. New numbers out from the Labor Department in mid February show the consumer price index rose 7.5 percent in January from a year ago. That’s the fastest increase since February 1982. It comes off a year that ALSO saw a historically high price increases.
In the grocery store, it’s undeniable. According to NBC news, the price of a gallon of milk rose 20 cents in the past year. A carton of eggs is up 31 cents on average. A pound of ground beef is up almost 60 cents. That may not seem like much, but it’s just a snapshot of the higher prices in the grocery aisles.
“It’s as much inflation as we’ve seen in quite a long time, says Corey Miller, State Economist and Director of the University Research Center.
Miller says we’ve had a perfect storm for inflation. First, COVID-19 shut down the economy. It led to pent-up demand when things re-opened. Federal government assistance programs triggered consumer spending, and interest rates as low as zero triggered even more. The result has been higher prices everywhere, including the gas pump, where the price you pay rose 36 percent in 2021.
“In Mississippi the gas prices hit us harder than in other states because, as a rural state, people have to drive everywhere, and lower income people have to spend a larger portion of their income on things like gasoline, food and housing,” Miller tells us. Article.
Perfect storm? Yes, there is a perfect storm but not for the reasons suggested by the smartest economist in Mississippi. Check out the chart below of the M2 money supply.
Notice anything special around March 2020? The money supply skyrocketed a record 40% in less than two years. It is up 12.6% over a year ago. More dollars means dollars are worth less in terms of purchasing power. A record number of dollars means the record inflation as we are experiencing today.
Mr. Miller predicted inflation would be much milder back in September when he told the Legislature's Budget Committee inflation would be 4.2% for the rest of 2021 and fall to 2.2% in 2022. Nothing like Mississippi mediocrity.
The federal government reported inflation hit 7.9% in February - before the oil price spikes and Russian invasion of Ukraine. However, monetarists predicted such inflation last summer. Invesco economist John Greenwood and Johns Hopkins University Professor Steve Hanke stated in a July 2021 Wall Street Journal column :
The inflation upticks aren’t temporary and were predictable, driven by an extraordinary explosion in the money supply. Since March 2020, the M2 has been growing at an average annualized rate of 23.9%—the fastest since World War II....
According to monetarism, asset-price inflation should have occurred with a lag of one to nine months. Then, with a lag of six to 18 months, economic activity should have started to pick up. Lastly, after a lag of 12 to 24 months, generalized inflation should have set in. That’s the standard monetarist sequence, and it’s been followed to a T....
money supply (M2) should be growing at around 6% a year for the Fed to hit its inflation target of 2%. With M2 growing at nearly four times the “ideal” rate since March 2020, inflation is baked into the cake, and it’s likely to persist. By the end of the year, the year-over-year inflation rate will be at least 6% and possibly as high as 9%...
Some who like to throw cold water on monetarism argue that the velocity of money has collapsed and will mitigate the inflationary impact of the rapid growth of the money supply. While velocity did collapse with the onset of Covid, it’s on track to pick up until the end of 2024. Consequently, velocity will grease the monetary wheels. That’s why inflation might hit the high end of our forecast range... Essay.
Inflation was going to get worse because of the money supply problem. Thanks to Mr. Putin and the oil markets, expect inflation to rise even higher than it would thanks to the massive spending over the last two years by both Republicans and Democrats.
41 comments:
the war in Ukraine (Putin) contributed an inordinately high amount to this because Biden compromised our national security by attacking our own country's fossil fuel industry as soon as he got in office while not having other sources available. He is led around like a sheep by the extremists elements of his demented party.
So the inflation measured prior to Feb 2022 is putins fault too?
This is the fairest explanation of inflation I've seen in a while:
Inflation was going to get worse because of the money supply problem. Thanks to Mr. Putin and the oil markets, expect inflation to rise even higher than it would thanks to the massive spending over the last two years by both Republicans and Democrats.
No "let's go brandon derrrrr" or "this is all Putin's fault." Like many problems, it is a combination of factors. And no one in Washington in either party has been serious about cutting spending for quite a long time.
You're right KF, it is attributable to both Dems and Repubs. But even deeper, it is attributable to many of us, the people, who want something for nothing. I.E. Decent housing is a human right; good medical care is a human right; decent nutrition is a human right; basic education is a human right -- etc.
If too many people are given the right, by handing them money, to consume goods and services, without any corresponding obligation to produce some goods and services, this sort of scenario will play out every time.
"Federal government assistance programs triggered consumer spending"
I reckon that's one way to say it.
Mr. Hill predicted inflation would be much milder back in September when he told the Legislature's Budget Committee inflation would be 4.2% for the rest of 2021 and fall to 2.2% in 2022.
Miller can't hit the side of a barn. That has been proven repeatedly here at JJ and elsewhere. If you're paying attention his narrative is always to support at the state level whatever is the current Donkeycrat party line. He's Keynesian to his core and now we're all, figuratively and literally, paying for it.
@9:12 AM, first para, you forgot to add that marijuana is a wonder drug.
@8:41AM please explain how anything Biden did reduced fossil fuel supplies here? Also, oil is not all the same. Much of the oil turned into gasoline in the US comes from other countries, while we export a lot of the oil produced in the US to be turned into plastics and other products. The idea that we can just pump everything we need here in the US is simplistic and ignorant.
https://www.api.org/news-policy-and-issues/blog/2018/06/14/why-the-us-must-import-and-export-oil
80% of all US dollars in existence were printed in the last 22 months. It has absolutely NOTHING to do with ukraine and russia (none of our business). It is the idiot in charge and the traitors voting to keep printing money. Bozo in charge shut down our oil production when we were energy independent for the first time in 70 years. FJB. Central banks finance both sides of all wars. They never speak of the 50k a month for hunter ... and that pelosi, romney and kerry all have children that worked for the ukranian gas company.
The USA had biolabs in ukraine. Why? Hopefully Russia will bomb them all. Nuland testified to the fact that we have biolabs and said if there was a biological attack it would be Russia. Seriously? WTF is the USA doing with biolabs in ukraine?
>b>So the inflation measured prior to Feb 2022 is putins fault too?/b>
Yes. Partially.
The oil trade had been pricing Putins likely invasion of the Ukrain for months prior to the invasion starting..ever since a significant amount of the the equipment used to invade in 2022 had been delivered for the 2021 exercises.
There are many people smarter than you working for commodity trading firms and the large buyers and sellers of commodities who spend all day every day making sure MR Market sees into the future.
So, it'll take longer than 14 days to flatten to the curve.
Regardless of whether the oil is used to refine into gasoline or in the production of plastics, supply is supply and a larger supply produces a lower price per barrel. What a stupid piece of apologia.
The epic economic idiocy displayed in some of these JJ threads by the people who think they have things figured out is showing out. The marks always think they have things figured out.
Is the inflation caused by the sanctions or the invasion? Because if we only have the inflation due to the sanctions, then it is self-inflicted.
After all, he is the chief economist for “Mississippi”. Does anyone really think if he were that smart, he would be working for this “hick” state?
And,why was there a money supply problem? Why ,when the pandemic hit,did the government start printing more money?
The highest inflation had been prior to Russia's invasion of Ukraine in the U.S. was when Reagan was President.
I would remind all of you, that allowing our dependence on oil to increase again didn't happen in this administration.
It wasn't the current administration buying oil from Russia. Plenty of blame to go around on both parties catering to fossil fuels.
Your last name would have to be Biden, Harris, Psaki or Pelosi to believe that you can increase the money supply by 40% and not increase inflation.
But it's all Putin's fault. Just ask Jen.
Listening to Jen Psaki is like listening to Baghad Bob.
2:05 Ummm, that was Reagan fixing the Carter disaster. Carter and Reagan both had Paul Volker as Fed Chairman. Reagan told Volker that unless he changed songbooks, he wouldn't be reappointed.
2:05 That was Reagan fixing the Carter disaster. Carter and Reagan both had Paul Volker as Fed Chairman. Reagan told Volker to change songbooks or he wouldn't be reappointed
Inflaton rate higher under Carter though that gets in the way of your narrative.
Blaming “inflation” and an “eeeeeevil foreigner” is all part of the controlled prelude to the boom/bust cycle where the central bankers contract the money supply and do an enormous rug pull beneath the plebs. Farms, banks, real estate, and private industry will become consolidated as they all suffer a massive liquidity squeeze until they go bust. Then globalist vultures will descend upon the nation from Manhattan pick out the best parts. Sometimes they let foreigners have some too. Since the are rootless cosmopolitans, they don’t really care about the interests of their host nations. Just what assets they can extract for themselves.
Printing money also probably helped our economy from falling off a cliff. We are just paying for it now. I think it was the right move at the time but everyone has short memories and wants to blame a bad decision somewhere.
I asked an economist friend for a telephone number. He replied, "I don't know, but I'll estimate it for you."
I would expect the reluctance of Putin invading Ukraine was minimized by the way the President handled the U.S. exit from Afghanistan.
"We know only too well that war comes not when the forces of freedom are strong, but when they are weak. It is then that tyrants are tempted."-Ronald Reagan
Let's not overlook these three realities:
1) Right or wrong - Trump knew what he was doing.
2) Right or wrong - Putin knew what he was doing.
3) Right or wrong - Biden has no idea what's being done by the regime.
Has there ever been another time in world history when a world leader was strapped in a restraint chair and made to look like he was speaking?
@10:26 am
Hey! I knew I’d see you somewhere mr .gov
Soo nothing Biden does hurts oil production? Maybe you should tell him.
Put this Biden clip in your url and smoke it;
https://mobile.twitter.com/CitizenFreePres/status/1502715391931518978?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1502715391931518978%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcitizenfreepress.com%2Fbreaking%2Fi-guarantee-we-are-going-to-end-fossil-fuels%2F
10:30 AM, your repeating bullshit that you have read somewhere else which was also probably repeating similar bullshit does not add much credibility to your overall comments.
Neither Pelosi, Kerry, or Romney have children (or stepchildren, in Kerry's case) that have any connection to Ukraine, a Ukrainian gas company, or anything similar. Biden of course did (Hunter) and one of Kerry's stepsons was a business partner with Hunter in a separate deal unrelated to Hunter's $500000 board member salary.
But - thanks for your tinfoil, hater idiocy. Always glad to waste a little time on a cool Saturday afternoon reading the continuing drama that some folks like to make up.
What "oil production" did Biden shut down? Are not the first three phases of the Keystone Pipeline currently functioning and flowing? Phase IV, know as Keystone XL, was begun 4/2020. Biden revoked permit 1/20/21 and the project was abandoned 6/2021 by TC Entergy and the Albertan govt with only 8% having been completed.
Some people have a very short memory. Brandon told the people what he was going to do to the price of oil before the idiots voted for him. Day one he stopped the pipe line. Even the Russian invasion is the fault of Brandon. If he wasn't so weak there wouldn't have been an invasion. Just wait until you see what China is going to do because of out idiot president.
So, thwarting energy production and cancelling the pipeline thereby causing an increase in the price of fuel, which is an element in the cost of everything, has nothing to do with it.
Hey Mr. .gov…
Dems have the answer;
“ Dem Rep. Sherman: 75 Cents of Gas Hike Due to Putin, U.S. Production Won’t Impact Oil Price,
Need Saudis to ‘Backfill”
Makes sense tif your a demotool
Geez- Biden didn't stop US production of oil. My neighbor is leaves every three weeks like clockwork. He will also tell you that his company is making record profits because they cut their staff to the bone two years ago and everyone remaining was so happy to have a job that they killed themselves to do it and now they aren't hiring people back. They also were on a 2/2 and because of Covid went to a 3/3 which saves the company major bucks in travel. Also not going back. He isn't a fan of Biden but also admits that profits are higher than ever and he doesn't see them cutting them anytime soon. Investors are happy.
Please explain how importing less than 3% of our oil from Russia makes a twit in a twat's worth of difference in the grande inflation scheme.
Too bad you want to ride in that gas guzzler ! I bought a Tesla and I just glide pass that gas and inflation.
Mix a gallon water with a gallon of high-octane gasoline. It works. Remember back in the days when your mammy used to add water to the milk to feed all those dusty-looking, homely-looking ass children who came from her worn-out womb?
I’m in my 60’s and have voted republican since the 70’s. I studied finance, economics, accounting and political science. The GOP is also responsible for this inflation. Period. Yes, Biden and the Dems are responsible but until a third party or the GOP gets back to fiscal sanity, the GOP will be complicit in the financial ruin of America.
RMQ
@12:12 PM
Pure comedy.
https://www.thegatewaypundit.com/2022/03/two-years-ago-today-joe-biden-promised-end-us-oil-industry-joe-kept-promise-today-gas-4-32-gallon/
Yep.. dementia joe and Dems have “done nothing” to hurt oil industry … bahhh ha ha..
“ Sarah Bloom Raskin became the second Biden banking nominee to sink after advocating for bankrupting the oil and natural gas industry.”
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