Low Inflation Is No ‘Mystery’

When is a mystery not a mystery? When Janet Yellen is puzzling over a lack of inflation, that’s when. So say Brian Wesbury, chief economist, and Robert Stein, deputy chief economist of First Trust, in today’s Outside the Box. The bottom line: QE didn’t work, and Janet knew it was unlikely to work, from the start.
So where did all that easy money go? I think I’ll let the authors tell you. I think you’ll enjoy this brief, clear-headed essay.
The essay was sent to me along with a rant by my friend Tom Bentley. One of his paragraphs really rang a bell with me:
Here’s the real problem: ‘The Fed has never fracked a well or written an app. We understand that government bureaucracies want to take credit for everything.’ They simply refuse to understand that government in a healthy economy must serve the needs of private endeavor, not the other way around. As taxes at all levels exceed 37% of GDP in the US, and over 50% in Europe, there should be no doubt why advanced country growth is lower than it has been since we’ve had advanced countries. Government typically makes a negative contribution to productivity – look at how much we have expanded employment in education (mostly by hiring more administrators), while educational outcomes have stagnated. The real travesty is, ‘[The Fed] is teaching an entire generation of young people, who in many cases don’t study economic history, that growth requires government intervention.’ Helps explain why so many millennials are Socialists, victims of the massive indoctrination campaign conducted by the Democrat party.

This post was published at Mauldin Economics on SEPTEMBER 27, 2017.