Oct 13 • 42M

Episode 4: Inflation Myths

 
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Llewellyn Jones
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Investigative Economics
The Volatile Inflation and Deflation in Consumer Spending
Recent inflation post-pandemic has seen price hikes effectively across the board for all manner of goods. Previously, inflation was steady. A regular 2 to 3 percent per year. But within each category of consumer goods and services, that wasn’t so much the case…
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Investigative Economics
Dollar Index Continues Its Ascent Despite Surging Inflation
Despite the steady growth in inflation over the last two years, the dollar index—a weighted average of the international value of the U.S. dollar compared to a basket of other currencies—continues to rise in line with inflation. In general, the dollar index should decline with large inflation. If the dollar is worth less in the U.S., it tends to be wort…
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Investigative Economics
Little Correlation Between Gasoline Prices and Inflation Until 2021
In testimony to the Senate Banking Committee in March, Federal Reserve Chairman Powell stated that every $10 increase in a barrel of oil leads to a .2 percent increase in inflation. That is, oil is inextricably linked with inflation. Not just the direct cost to consumers for gasoline, but because petroleum is instrumental in almost every aspect of the ec…
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Investigative Economics
Significant Increase in Food Price Inflation Came Well Before 2021
On a year-to-year basis, inflation was 5.4 percent in July of 2021, the largest increase since 2008, and there are expectations that the consumer price index (CPI) could continue to rise through the rest of the year. But while the recent sharp rise in overall inflation in the last two months has gotten significant attention, food prices were already seei…
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Investigative Economics
Inflation Didn't Budge as Monetary Supply Grew Following Financial Crisis
A long standing economic theory states that money supply controls inflation. Otherwise known as the equation of exchange, it states that the total amount of money in the economy is equivalent to the total value of goods and services. The implication being that with more money in the economy, producers and retailers will charge more for goods and servi…
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Investigative Economics
How Inflation Jump Skews Short-Term GDP, Labor, Trade Metrics
In the first quarter of 2022, U.S. productivity dropped as real gross domestic product (GDP) fell for the first time since the beginnings of the pandemic. A May Bloomberg story attributed the drop, the “largest since 1947,” to an increase in labor costs and a growing trade deficit…
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Investigative Economics
Current CPI-PPI Spread Lowest in Decades
The Consumer Price Index (CPI) is an average for the cost of goods to consumers that determines inflation or the relative value of currency. The Producer Price Index (PPI) is an average of prices received by domestic producers. Throughout the 60s, 70s, and 80s, PPI and CPI were similar. The spread between the two—CPI minus PPI—hovered around zero…
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Investigative Economics
Retail Beef Price Spreads, Not Wholesale, Have Grown the Most
The Biden administration recently published a plan to deal with the growing cost of beef driven by a monopoly in the beef processing industry. Currently four companies—Cargill, Tyson Foods, JBS, and National Beef Packing—control over 85 percent of the processing market…
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