Hi
If any creation of money create inflation, why is the inflation so low ? Why prices haven’t gone up much ? I mean, if new money make prices go up, then I would expect us to be unable to afford computers, TVs, or even food, since there are billions of new money created each year…
Well, the rate of price inflation has been increasing. Money affects prices as it’s used to bid for goods. For the most part, much of the money created after the recession began in late 2007 is sitting in bank reserves. Once that money is used to purchase goods then we’ll see a rise in prices. With that said, it’s important to highlight the rise in the price of assets and commodities. Generally, consumer-goods are affected last.
Who says they are not going up fast? Your Not So Friendly, Violent, Theif called government. Go to ShadowStats.com and see that the real CPI is running about 6% and has not been negative in the past several years.
That having been said, the reason is that banks are keeping their reserves with the Fed and getting a 0.75% interest rate on them. The Fed really does not want the banks lending like crazy balooning their 1.5 trillion in excess reserves up to 100 trillion in outstanding loans. So they give them this little perk to keep money with them.
It was mentioned in the recent Lew Rockwell podcast that food and energy price inflation in the US is 19%?
I find it most likely that prices haven’t gone as low as they would have if the Fed hadn’t inflated.