Rather than making money harder to get, the U.S. government needs to focus on the other side of the demand vs. supply equation.
In prescribing cures for inflation, economists rely on the diagnosis of Nobel laureate Milton Friedman: inflation is always and everywhere a monetary phenomenon—too much money chasing too few goods. But that equation has three variables: too much money (“demand”) chasing (the “velocity” of spending) too few goods (“supply”). And “orthodox” economists, from Lawrence Summers to the Federal Reserve, seem to be focusing only on the “demand” variable.
The Fed’s prescription is to suppress demand (borrowing and spending) by raising interest rates. Summers, a former U.S. Treasury Secretary who presided over the massive post-2008 bank bailouts, is proposing to reduce demand by raising taxes or raising unemployment rates, reducing disposable income and thus people’s ability to spend. But those rather brutal solutions miss the real problem, just as Summers missed the crisis leading up to the 2008-09 crash. As explained in a November 2021 editorial titled “Too Few Goods – The Simple Explanation for October’s Elevated Inflation Rates,” we don’t actually have too much consumer money chasing available goods:
Continue readingFiled under: Ellen Brown Articles/Commentary | Tagged: 2022 INFLATION, Ellen Brown, FED INFLATION, Inflation, interest rates, LAWRENCE SUMMERS, Lockdown, Paul Volcker, public banking, US INFLATION | 18 Comments »
WEB OF DEBT BLOG 
Solving the Debt Crisis the American Way
Our forefathers turned their debts into currency. That Constitutional approach could work today.
On Friday, Jan. 13, Treasury Secretary Janet Yellen wrote to Congress that the U.S. government will hit its borrowing limit on Jan. 19, forcing the new Congress into negotiations over the debt limit much sooner than expected. She said she will use accounting maneuvers she called “extraordinary measures” to keep U.S. finances running for a few months, pushing the potential date for default to sometime in the summer. But she urged Congress to get to work on raising the debt ceiling.
Lifting it above its current $31.385 trillion limit won’t be easy with a highly divided and gridlocked Congress. As former Republican politician David Stockman crowed in a Jan. 11 article:
Continue reading →Filed under: Ellen Brown Articles/Commentary | Tagged: AMERICAN DEBT, banks, debt ceiling, economy, HOUSE OF REPRESENTATIVES, Inflation, interest rates, quantitative easing, STIMULUS, Trillion dollar coin | 38 Comments »