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If You Fight Inflation With Fed Rate Hikes, You Don’t Fight Inflation

It’s worth repeating that higher prices are at best an effect of inflation, not inflation itself. To say they’re inflation is like saying suntans cause the sun.

Inflation is a shrinkage or devaluation of the unit, as opposed to it being what simple minds want it to be. Where it’s maybe interesting is that while most economists and pundits are a bit clueless about what inflation is (Fed officials near unanimously think it’s an effect of too much growth, for instance), there’s unanimity that price controls are no way to combat the higher prices that some imagine are a sign of inflation.

Yet there’s near unanimity that rate hikes will fix inflation. Yes, price controls. Good luck with them. 

Read the whole article at Forbes

Author

  • John Tamny

    John Tamny is a popular speaker and author in the U.S. and around the world. His speech topics include "Government Barriers to Economic Growth," "Why Washington and Wall Street are Better Off Living Apart," and more.

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