The Economic Story And Its Mishandling

The Economic Story And Its Mishandling

The Economic Story And Its Mishandling

Inflation is cumulative – that is, prices paid in the present are the result of accumulated price increases. Even as real inflation goes down, prices remain an aggregation of all price increases during the inflationary period. As a result, groceries and other necessities continue to have elevated prices, even as inflation gets tamed. While that might be obvious to everyone but politicians, another question about inflation needs to be asked: Should all price increases be treated the same? Or said another way, can the Fed’s rate increases address supply issues with the same effect as they do demand issues?

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