Kerby Anderson

Is inflation on the horizon? The chairman of the Federal Reserve (Jerome Powell) doesn’t think so. He concluded that, “Inflation is not a problem for this time as near as I can figure. Right now, M2 does not really have important implications.” What he is talking about is the M2 money supply, which measures cash, checks, money market, mutual funds, etc. If you type the words “M2 Money Stock” on a computer, you will see two things. First, the amount of money printed shoots straight up in 2020. Second, you will notice the words “Discontinued.” The Federal Reserve weekly chart is discontinued and only is updated monthly now. That should give you some idea of what may be coming. In a past commentary, I explained how the consumer price index is not an accurate measure of inflation. Then I realized I wrote that commentary on May 12, 2011. Obviously, it’s time for an update! I will do that tomorrow. For now, let me state that the consumer price index is based upon a basket of goods, which excludes many that affect you and your family. Look, for example, at the increase in home values in a few areas of the country. In the last year, the Zillow Home Value Index for Austin increased 15.8%, Los Angeles increased 9.5%, Denver increased 7.8%, and Seattle increased 7.5% Other prices have increased dramatically due to the disruption of the supply chain during the pandemic. Surging lumber prices will increase the price of an average home by $35,872 according to the National Association of Home Builders. Economists may say that inflation is not a problem, but we can all see that prices are rising due to everything from monetary inflation to supply chain disruption.