Update on the Inflation Debate
Brian Wesbury and Scott Grannis remain concerned about inflation, citing the recent Producer Price report from the BLS. I remain an inflation skeptic based on the two charts above, which show that the 10-15% producer price inflation in the 1970s (bottom chart) was accompanied by much, much higher money growth (top chart). The core ingredient of inflation (producer or consumer) is money growth, and there just doesn't seem to be enough M2 money growth to generate 1970s-era inflation.
Brian Wesbury and Scott Grannis remain concerned about inflation, citing the recent Producer Price report from the BLS. I remain an inflation skeptic based on the two charts above, which show that the 10-15% producer price inflation in the 1970s (bottom chart) was accompanied by much, much higher money growth (top chart). The core ingredient of inflation (producer or consumer) is money growth, and there just doesn't seem to be enough M2 money growth to generate 1970s-era inflation.
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