War is not inflation, printing is inflation
I firmly believe that a great game of misdirection is in play, whether intentional or just out of ignorance. That misdirection is in the form of inflation hysteria taking place because a commodity (oil) is spiking in price due to non-inflation means (war). War is not inflation. Money printing is inflation.
The bond market is having a tantrum, the stock market is weak, and if oil remains this way the result is going to be disinflationary pressure. Not inflationary pressure.
Try not to listen to the media and whatever interests would like you to believe this has anything to do with inflation. Inflation can only be created by monetary abuse from the Fed (printing) and fiscal abuse from government spending the new funny munny.
Oh, they will crank up that inflationary machinery again, that’s all but certain. But the current situation is neither monetary nor fiscal. It is war. The government is (debt) spending, but the Fed has not yet begun to manufacture new dollars. Not in any significant manner, anyway.
The Fed will inflict the next inflationary phase up on us after the war noise fades to obvious economic slowing, the herds go “ruh roh, where dat inflation dey told me ta beware of?” and the main concern becomes the economy.
Then our heroes at the Fed and in government will take action. At first it may feel good, as bailouts often do. Then, probably sometime in 2027, we’re going to feel the corrosive effects of the next REAL inflation. Today? This ain’t it.
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100% correct.
The $25 tacos reminded me of the fact that a bowl of ramen can be $25 today in NYC. I looked up my local shop in Tokyo when I lived there 14 years ago. Around JPY 1100 up from JPY 800, but the price today is lower in USD terms. Carry trades…….
The Raman trade… doesn’t seem to have the same ring to it. :-)
Money creation to pay for war is inflation, is it not?
Money creation to pay for or spend on anything is inflation.
War costs money with negative return on investment so how is it that war does not cause inflation?
Inflation is a monetary thing. When too much of it is printed, its value decreases relative to goods and services. If the war is causing the printing press to fire up, that’s inflation. If they are rearranging the deck chairs in order to fund the war, that is using the whatever’s left of the previous inflation. Rising costs are rising costs, but they are not the result of any material new inflationary operations.
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Inflation is the act of printing too much money into existence. The Fed and gov are readying for it now. The war is using up the proceeds of the previous inflation and the next inflation is going to be hell, IMO. Because the bond market advises the seed corn is all eaten.