An important reminder

The Federal Reserve's inflation target is 2% and an important indicator the board uses for measuring inflation is the Personal Expenditures Consumption (PCE) index. Last Friday the government reported that both core PCE (excluding food and energy) and regular PCE was running at 1.5% on a year over year basis.

Should we be concerned about hyperinflation?

As the central bank creates or distributes more money, people don't suddenly go out and consume goods and services. Falling or rising interest rates play out where they are the primary cost of doing business: financial transactions. The chart below shows the relationship between monetary velocity (nominal GDP per dollar of monetary base) and Treasury … Continue reading Should we be concerned about hyperinflation?