How Can Monetary Growth Slow And Inflation Grow?

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How Can Monetary Growth Slow And Inflation Grow?

By Mark Perry on August 21, 2008 | More Posts By Mark Perry | Author's Website

Brian Wesbury asks: “How can monetary base growth slow for seven straight years without pushing inflation down? If you agree with Friedman, it should have caused a decline in inflation, but every measure of inflation is higher, not lower.”

MP: What about annual core inflation? It’s been flat for 10 years now at about 2%, see chart above, is lower now than it was several years ago, and less than 50% of the long-term 4.58%average.

As I suggested before on several posts, unless and until core inflation rises like it did in the 1970s (see chart above), inflation can’t be “a clear and present danger,” as Brian suggests.

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