Fed Chairman Powell "Doesn't Understand Inflation"

 “I think we now understand better how little we understand about inflation,” Powell stated at the European Central Bank forum on central banking in Sintra, Portugal. “This was unpredicted,” the expert admitted.

Everybody involved, including Powell, knows exactly how inflation works. It's been happening since the Roman Empire. Printing, or in this case, enpixelating, trillions of dollars, is going to inevitably decrease the value of dollars already in circulation. It will require more devalued dollars to purchase the same amount of beer, potato chips, Ford pick-ups or aircraft carriers than it did before the amount of money in circulation increased.

 

NY Times.com

Powell, and the other bankers that make up the Federal Reserve, can't admit that they know what causes the value of US money to diminish because then they would be expected to fix the problem or prevent it in the first place. They would be revealed as incompetents or crooks. 

To negate the inflationary monetary expansion it would be necessary to hoover a similar amount out of the economy. One way would be for each and every Yankee to ignite a pile of a little more than $17,000 in US funds on fire in their backyard barbecue. Since much of the monetary expansion initially goes to the Fed member banks, that suggestion would go nowhere. 

In fact, the federal government itself is probably not all that unhappy about an inflationary environment. Since it owes trillions of dollars to holders of US Treasury bonds, simply enpixelating the money to cover the interest becomes much easier than raising the taxes that would otherwise be required to make those interest payments.

The downside to the inflationary spiral is that actual and potential holders of US debt of all kinds will be more and more reluctant to hold that debt. First, interest on Treasuries will increase, as they already have. Naive high school graduates won't become excited by the gift of a savings bond from Grandma. Even if the constructed goal of 2% inflation that supposedly keeps the consumer engine running is successful, it means that non-consumers and those with a fixed income are, in the long run, hosed. If they bought a house for $50,000 in 1970 and it now lists for $350,000, the profit from it's sale will be an illusion.