Federal Reserve Fails to Realize That ‘Inflation Is Always and Everywhere a Monetary Phenomenon’ |
One of the simplest explanations for inflation is too much money chasing too few goods. As Milton Friedman put it, “inflation is always and everywhere a monetary phenomenon.”
With this being the case, the Federal Reserve’s recent decision to begin another round of quantitative easing makes zero sense, considering that inflation is still above the Federal Reserve’s annual target of 2 percent.
While the Fed’s rate cut received all the headlines, the real story is that the central bank is going to expand its balance sheet again by buying huge amounts of Treasury bills.
Specifically, the Fed announced it will launch “reserve management........