This article was originally published by Austin Litman on Proofofwork.ca
What happened to “inflation is transitory”? Why were we told that inflation wasn’t going to last? Because they were able to get away with it and wanted to keep the population calm. The average Joe doesn’t know how inflation works, so the Fed can say anything. Here’s how inflation works:
When the supply of something goes up, its value goes down.
1/5 of the money supply in Canada was printed in the last TWO YEARS.
If they said that straight to the public, they would think the government is dumb for doing that. That’s why they hide behind words like quantitative easing and other jargon. But it’s as simple as the bolded text above. The only way the value of something doesn’t go down if the supply increases is if demand increases equally. The need for USD to be a world reserve currency is decreasing, though. So increasing the supply of an asset with reducing demand is double no good!
