A. Mitchell Innes: “What is Money?”

The notion that no one mayknows anything at all about how an economy works is shown by this article from May 1913. Excerpts from What is Money? by A. Mitchell Innes. Attempts to demonstrate the notion that money is nothing other than a form of debt. I don’t have any view on this other than to note its existence since I have only just come across Innes through one of his modern day advocates. I’m not even sure I know what follows if any of this is true.

 I have made this rapid survey of early coinages to show that from the beginning of the rise of the art of coining metal, there is no evidence of a metallic standard of value, but later history, especially that of France up to the Revolution, demonstrates with such singular clearness the fact that no such standard ever existed, that it may be said without exaggeration that no scientific theory has ever been put forward which was more completely lacking in foundation.

The official values were purely arbitrary and had nothing to do with the intrinsic value of the coins.

The general idea that the kings wilfully debased their coinage, in the sense of reducing their weight and fineness is without foundation.

Now if it is true that coins had no stable value, that for centuries at a time there was no gold or silver coinage, but only coins of base metal of various alloys, that changes in the coinage did not affect prices, that the coinage never played any considerable part in commerce, that the monetary unit was distinct from the coinage and that the price of gold and silver fluctuated constantly in terms of that unit (and these propositions are so abundantly proved by historical evidence that there is no doubt of their truth), then it is clear that the precious metals could not have been a standard of value nor could they have been the medium of exchange.

Adam Smith’s position depends on the truth of the proposition that, if the baker or the brewer wants meat from the butcher, but has (the latter being sufficiently provided with bread and beer) nothing to offer in exchange, no exchange can be made between them. If this were true, the doctrine of a medium of exchange would, perhaps, be correct. But is it true?

Assuming the baker and the brewer to be honest men, and honesty is no modern virtue, the butcher could take from them an acknowledgment that they had bought from him so much meat, and all we have to assume is that the community would recognize the obligation of the baker and the brewer to redeem these acknowledgments in bread or beer at the relative values current in the village market, whenever they might be presented to them, and we at once have a good and sufficient currency. A sale, according to this theory, is not the exchange of a commodity for some intermediate commodity called the “medium of exchange,” but the exchange of a commodity for a credit.

It is here necessary to explain the primitive and the only true commercial or economic meaning of the word “credit.” It is simply the correlative of debt.

Credit is the purchasing power so often mentioned in economic works as being one of the principal attributes of money, and, as I shall try to show, credit and credit alone is money.

The really important characteristic of a credit is not the right which it gives to “payment” of a debt, but the right that it confers on the holder to liberate himself from debt by its means—a right recognized by all societies. 

For many centuries, how many we do not know, the principal instrument of commerce was neither the coin nor the private token, but the tally, a stick of squared hazel-wood, notched in a certain manner to indicate the amount of the purchase or debt. The name of the debtor and the date of the transaction were written on two opposite sides of the stick, which was then split down the middle in such a way that the notches were cut in half, and the name and date appeared on both pieces of the tally. The split was stopped by a cross-cut about an inch from the base of the stick, so that one of the pieces was shorter than the other. One piece, called the “stock,” 6 was issued to the seller or creditor, while the other, called the “stub” or “counter-stock,” was kept by the buyer or debtor. Both halves were thus a complete record of the credit and debt and the debtor was protected by his stub from the fraudulent imitation of or tampering with his tally.

The labors of modern archaeologists have brought to light numbers of objects of extreme antiquity, which may with confidence be pronounced to be ancient tallies, or instruments of a precisely similar nature; so that we can hardly doubt that commerce from the most primitive times was carried on by means of credit, and not with any “medium of exchange.”

We know, of course, hardly anything about the commerce of those far-off days, but what we do know is that great commerce was carried on and that the transfer of credit from hand to hand and from place to place was as well known to the Babylonians as it is to us. We have the accounts of great merchant or banking firms taking part in state finance and state tax collection, just as the great Genoese and Florentine bankers did in the middle ages, and as our banks do to-day.

In China, also, in times as remote as those of the Babylonian Empire, we find banks and instruments of credit long before any coins existed, and throughout practically the whole of Chinese history, so far as I have been able to learn, the coins have always been mere tokens.

There is no question but that credit is far older than cash.

There can be little doubt that banking was brought to Europe by the Jews of Babylonia, who spread over the Greek Colonies of the Asiatic coast, settled on the Grecian mainland and in the coast towns of northern Africa long before the Christian era. Westward they travelled and established themselves in the cities of Italy, Gaul and Spain either before or soon after the Christian era, and, though historians believe that they did not reach Britain till the time of the Roman conquest, it appears to me highly probable that the Jews of Gaul had their agents in the English coast towns over against Gaul, and that the early British coins were chiefly their work.

The monetary unit is merely an arbitrary denomination, by which commodities are measured in terms of credit, and which serves, therefore, as a more or less accurate measure of the value of all commodities.

Money, then, is credit and nothing but credit. A’s money is B’s debt to him, and when B pays his debt, A’s money disappears. This is the whole theory of money.

On no banking question does there exist more confusion of ideas than on the subject of the nature of a banknote.

The quantitative theory of money has impelled all governments to regulate the note issue, so as to prevent an over issue of “money.” But the idea that some special danger lurks in the bank-note is without foundation. The holder of a bank-note is simply a depositor in a bank, and the issue of bank-notes is merely a convenience to depositors.

Future ages will laugh at their forefathers of the nineteenth and twentieth centuries, who gravely bought gold to imprison in dungeons in the belief that they were thereby obeying a high economic law and increasing the wealth and prosperity of the world.

A strange delusion, my masters, for a generation which prides itself on its knowledge of Economy and Finance and one which, let us hope, will not long survive. When once the precious metal has been freed from the shackles of laws which are unworthy of the age in which we live, who knows what uses may not be in store for it to benefit the whole world?

Noticing the death of the History of Economic Thought

The History of Economic Thought, as with all forms of history at the present time, is on its last legs. This is a post I put up on the Societies for the History of Economics (SHOE) list last week (July 23).

I am actually replying to two different postings, the first one from quite a while ago now, which was the death notice of one of HET’s greatest names, Donald Moggridge. I had assumed that after the two-line notice something more substantial would appear but it seems not. There must have been some notice taken somewhere else, but I just wish to say how much I appreciated the phenomenal effort that must have been required to edit Keynes’s Collected Writings. I will merely tell my own small story which was that there was some part of the thirty volumes that I came across that worried me enough not to pursue some line of inquiry until I had been to the Library at Kings to see what the original had actually looked like. And I was pleased in one sense – but disappointed given what I had intended to write – to find that the passage as printed was exactly as found in the original. I am no Keynesian, but Keynes was served astonishingly well by the work that Don Moggridge put in to edit his writings and his correspondence. The History of Economics has lost a great scholar.
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Let me also note here how shallow economic theory has become due to the abandonment of its history by economists worldwide. “The inconvenient aunts locked away in garretts” discussed by Andrew Reamer are the many astonishingly deep analyses of the operations of an economy that are found in so many of the great works of economic theory that are not only no longer read, but no longer can be read. I have merely scratched the surface in my pursuit of the economics of John Stuart Mill, whose Principles, in my view, provides a better understanding of how an economy works than any of the textbooks we mass produce today. I therefore would like to support and endorse the views of Andrew Reamer, assuming I have understood him correctly, and can only wish that a new generation of economists will increasingly rediscover the lost treasures of our economic past. If economists are not scandalised by the economic policies which are being introduced around the world today, and do not say so in public, then really what is the point of any of what we are doing in writing the empty articles that pour out of our modern economic journals?
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This was the post that had been sent by Andrew Reamer.

Although neoclassical economics relies on assumptions that should have been discarded long ago, it remains the mainstream orthodoxy. Three recent books, and one older one, help to show why its staying power should be regarded as a scandal.

Opening:

Self-regarding economics departments at prestigious academic institutions no longer bother to teach the history of economic thought – a field that I studied at Yale University in 1977, forever compromising my academic career. Why was the topic abandoned – and even shunned and mocked? Students with a skeptical turn of mind would not be wrong to suspect that it was for scandalous reasons (as when, in past centuries, inconvenient aunts were locked away in garrets).

The four books reviewed here each uncover parts of the scandal. Three are brand new, and the other, The Corruption of Economics, first appeared in 1994 and was re-issued in 2006. Its principal author, the American economist Mason Gaffney, kept his remarkable pen flowing until passing away last summer at the age of 96.

You don’t often see an article as pointed as that and it was very welcome to me. But I have remained the only person who has entered into this discussion. I think it is interesting and worth continuing with but no one is willing to put their hand up any longer. Everywhere careers are too fragile to buy into any such controversy. And this was the note put up on June 23 announcing the death of Donald Moggridge.

I write to share the sad news that Donald E. Moggridge died peacefully in Toronto on April 10, 2021. Don was the main editor of The Collected Writings of John Maynard Keynes (1970-1989) as well as the author of biographies of Keynes (1992) and Harry Johnson (2008). Although subscribers to the SHOE list will know Don as a pre-eminent historian of economic thought, he was also a noted economic historian with a specialty in British monetary policy.

Perhaps there was no more to say, but perhaps there was. Anyone who has done work on Keynes must be extremely grateful for the painstaking efforts that went into the thirty volumes of the Keynes Collected Writings. I might add that I am such an outcast that Andrew Reamer has not bothered to write to me either, although I wrote to him offline on two occasions. And that I find just plain rude.

Modern economics provides no sound advice on how to manage an economy

Modern economic theory is complete trash, as I have noted before, but which is now also discussed here: Dismal Economics.

Although neoclassical economics relies on assumptions that should have been discarded long ago, it remains the mainstream orthodoxy. Three recent books, and one older one, help to show why its staying power should be regarded as a scandal.

Let me therefore mention my own book that deals with this ongoing scandal, a book which is now available as a paperback: Classical Economic Theory and the Modern Economy. This is the short description at the link:

Economic theory reached its zenith of analytical power and depth of understanding in the middle of the nineteenth century among John Stuart Mill and his contemporaries. This book explains what took place in the ensuing Marginal Revolution and Keynesian Revolution that left economists less able to understand how economies operate. It explores the false mythology that has obscured the arguments of classical economists, providing a pathway into the theory they developed.

Modern economic theory provides no obstacle to any of the inanities that pass for public economic policy at the present time. If anything, vast oceans of public sector debt and huge increases in the stock of money are seen as in keeping with modern theory, which they largely are.

“Issue assignats” is always the answer to the economic ignoramuses of the left

This is from the final pages of Edmund Burke’s Reflections on the Revolution in France from 1790. Change “assignats” into dollars and it could be modern day America.

Is there a debt which presses them?—Issue assignats. Are compensations to be made or a maintenance decreed to those whom they have robbed of their freehold in their office, or expelled from their profession?—Assignats. Is a fleet to be fitted out?— Assignats. If sixteen millions sterling of these assignats, forced on the people, leave the wants of the state as urgent as ever—issue, says one, thirty millions sterling of assignats—says another, issue fourscore millions more of assignats. The only difference among their financial factions is on the greater or the lesser quantity of assignats to be imposed on the public sufferance. They are all professors of assignats. Even those whose natural good sense and knowledge of commerce, not obliterated by philosophy, furnish decisive arguments against this delusion conclude their arguments by proposing the emission of assignats. I suppose they must talk of assignats, as no other language would be understood. All experience of their inefficiency does not in the least discourage them. Are the old assignats depreciated at market?—What is the remedy? Issue new assignats.

Modern Monetary Theory is not so modern after all. Reading Edmund Burke is like reading something that might have been published this morning, given how stupid and unteachable the left forever is. The passage above is found at Reflections on the Revolution in France, page 194. To which, a little later is added this.

The objections within the Assembly to pulling up the floodgates for this inundation of fraud are unanswered, but they are thoroughly refuted by a hundred thousand financiers in the street. These are the numbers by which the metaphysic arithmeticians compute. These are the grand calculations on which a philosophical public credit is founded in France. They cannot raise supplies, but they can raise mobs. (ibid. 198)

It’s so accurate it’s uncanny. 

A discussion of the many failures of Keynesian economics

This is an article written in 2009 replying to an article that criticised something I had written prior to that. My own article reprinted below was titled, Picking losers and was in reply to this written by James Guest. My original article that set this exchange in motion was published at Quadrant and titled, The Dangers of Keynesian Economics, dangers which are endless and only getting worse. There is nothing in the least dated in the article reprinted here even if the names are now different and the circumstances have now changed. For all that, governments are still stealing from the poor and middle class to give to our so-called public servants along with the rich.

The difference between myself and James Guest seems to come down to whether one actually believes markets work or, instead, thinks that we cannot count on them for growth and prosperity and that the government must come to the economy’s rescue to keep things ticking over. 

There has been, let us agree, a major dislocation in markets across the world. Jobs are being lost in 2009 at a rate we have not seen for sixteen or seventeen years. It’s not good, you wish it were better, but it’s the way things are. 

Moreover, these occurrences are not unknown but take place with a kind of regularity that makes their visitation unwelcome but not completely unexpected. Economies are subject to the cycle, and in the downturn firms that cannot make a quid disappear. 

So what do we do now? Do we have our domestic entrepreneurs decide where the best use of our resources would be, or do we leave it to Kevin Rudd and Co? Do we let people who have a market-focused desire not to lose their money make such decisions, or do we pass the baton onto a bunch of politicians and public servants who, if a productive economy is still our aim, are almost by definition incapable of deciding how our resources should be put to use. 

Let me therefore say exactly what Richard Posner is quoted as saying so there is no need to infer anything about my thoughts. The stimulus is very expensive and may well do major long-term damage to the economy. 

We are already looking at a budget that we are told is going to squeeze billions out of every hollow log the government can identify. The Government has committed large amounts of money on various projects of its own that it now must fund by raising taxes and imposts at every turn while winding back various benefits that had been provided in the past. 

How can any of this be a good thing? We are socialising more and more of our economy, putting decisions into the hands of those who have no genuine competence to make productive decisions. It will rescue some now at the expense of many more later on. 

James Guest quotes my writing that “it is clearly difficult to get the message across that spending money on anything at all is not the road to growth.”  It just seems to me that in his reply, he confirms just exactly that. 

He signs on to the expenditure on insulation without I am sure having done a moment’s worth of analysis himself. He writes: 

If the program were using resources which would otherwise be used in a more productive way that would be a ground for criticising it but that is not likely to be the case because the contracts to insulate houses and the budget spending tap for them can be turned on and off very quickly.  

OK, then. Come to the end of the project. There will then be many houses with insulation and there will be the debt the government incurred in having all this work done. You can say the same about the school auditoriums that are being built on the same principles. But what there won’t be is a single dollar of additional cash flow in the hands of government which it can use to pay off that debt. 

This is in complete contrast from a well chosen, properly costed private sector project of the same sort. In the private sector, such activities are designed to be self funding from the eventual cash flows that accrue when the project is up and running and earning its keep. 

On government project of this kind, however, there really never is a time when the debts are paid off. Only when some form of austerity is forced on public revenues because of the need to pay off the interest on the debt do the debts eventually disappear. 

And all the while the resources that are being used in these loss-making government projects are not being used in profit-making activities elsewhere. There are therefore the large but invisible losses to the economy of all the activities that were not done because the government has decided to direct our limited and scarce capital and labour into projects of its choosing. What we are losing are the projects that would have been supported on the market by people who would actually have been willing to pay for the goods or services when they were finally put up for sale. 

From the way James Guest writes, you would think we were in the midst of the Great Depression. You would think that we are wrestling with mass unemployment rather than a minor downturn in activity that, were it left to work itself out, could at least in Australia, be over and done with by the start of next year. 

We do not have a quarter of the labour force unemployed, as we did in 1932. That a forecast unemployment rate of between 7-8% should be a trigger for a spending frenzy shows a lack of proportion, and little regard for the long-term consequences that piling up such debt may cause. 

The problem once again seems to come back to macroeconomic theory as it is now taught. All spending is good no matter what it’s on. You put the various outlays under the labels consumption, investment or government – the C+I+G of modern theory – and forget about what you are spending the money on. It is really all the same, so the particulars apparently don’t matter. 

Public sector construction projects, without an increase in value relative to their costs, is a loss-making enterprise, just as it would be in the private sector. Running deficits for a net loss in value is like a giant Ponzi scheme. 

Macro theory tells you that there are multiplier effects. Even if the original outlay loses money, it is said, all of the secondary expenditures on various goods and services do their part to keep the economy growing. 

But if the initial expenditure loses money, then all of the secondary expenditures that hang off it are contributions to an overall loss-making project. Imagine if every one of the related expenditures had been part of a single enterprise. The fact that this spending is broken down into individual payments to various enterprises only disguises the fact that whatever is being produced is not leading to the creation of enough value to repay all of the costs. 

The economy is not creating enough additional value to validate the increase in the total level of spending. Something, somewhere will have to give. 

There is then the US.  The American stimulus package puts in place an immense increase in expenditure and a massive increase in debt. Yet James Guest believes that Obama’s $800 billion package is so paltry that it is “hardly going to touch the sides”. 

Is there really no sense of just how much sludge in the crankcase this expenditure will create? What will it take for it to be understood that economic growth occurs not in the spending but in the goods and services produced? 

It is true that a large part of the wealth we thought we had has disappeared. It was paper wealth, bundled up in asset values that when actually tested on the market, turned out to be a mirage. That says to me that our economic structure had become distorted and that some rearrangement of our economic structure is now required. 

Into this readjustment process we are now going to interpose government direction of expenditure on assets that will never pay for their own keep and we are doing so without an ounce of evidence anywhere to show that they will. 

We are creating the conditions for a very slow recovery in real incomes and another downturn to follow whatever upturn we now manufacture. Because of our spending today, the basis for a truly sustained period of growth and prosperity may continually elude us. 

Each and every job in the private sector must create value for those who employ. In the public sector, around the first 30% of expenditure might be productive in that sense, but the rest is taxpayer funded admin and transfers. I don’t say it is necessarily without value or purpose, only that it is dependent on taxpayer funding to allow these activities to occur. 

But what can be said about the extraordinary expenditures governments are now taking on to spend the economy into recovery? These are deficit financed without a thought in the world on how to pay them off. 

It is the timeworn role of governments to pick losers. It is what governments can be expected to do for which they have had much practice. I cannot think why they should be encouraged further along this road than they have already gone.

Expert advice everywhere

We were out to dinner last night with some friends of my wife from her days in high school when the words Uganda and HCQ entered the conversation. The exchange of words – now by email – continues already into this morning and will no doubt continue for a bit longer. These people on the left are seriously deranged. They do not actually want to make anyone better off, or at least not unless it benefits them even more. Good thing we didn’t mention Ivermectin. But just in case you are interested, there is this to consider: Ivermectin: Whole of Country Trials Updated where you will find:

  India’s second wave was looking ominous until a number of Indian states started issuing ivermectin to treat Covid patients. Then, on 7th June, approval of ivermectin was revoked at the federal level. This was followed by an immediate reversal of trend until sanity prevailed again. You have to admire health officials who quite readily sacrifice the lives of several thousand of their fellow citizens in order to generate irrefutable efficacy data.     The Czech Republic was also having a torrid second wave of the virus until ivermectin was approved on 8th March. On 30th June the death rate was down to two per day.  

Meanwhile the usual clowns who pretend they are experts in a disease that was unknown to the world until last year are now declaring: These masks here to stay.

University of Melbourne professorial fellow in epidemiology Tony Blakely agreed. “Vaccination alone is not the exit strategy,” he said. “We won’t be throwing away masks, we will still be wearing them on public transport, for example. “We will be wearing them indoors when there is a community outbreak.” Head of the University of Melbourne’s school of population and global health, Nancy Baxter, said: “We have to get a lot more used to wearing masks.” She said better ventilation in some buildings would also be crucial to reducing airborne transmission once the virus was in the community, especially at schools where many children might not be vaccinated. The cover-up call comes as the scientific community braces for the coronavirus battle to last several years, and as Australia prepares to open to the rest of the world, where often vastly different health strategies are in place.

These filthy face coverings will cause more damage than Covid, and I should know because I, too, am an expert. And I predict our living standards will fall and there will be less overseas travel. This from The Age/

Ticket prices for London to Sydney flights over the next fortnight bounced erratically on Saturday, at times as high as $38,000, the day after Prime Minister Scott Morrison announced a reduction to just 3000 inbound passengers a week in response to the risks posed by the Delta strain of COVID-19.

Plus this from The Herald Sun:

Treasury’s forecast. An average family will be hit by a real wage fall of $21,000 over the next four years. An analysis of May’s budget papers has found the federal government expects real wages for an average Australian family to fall that much over that time.

And who’s to say I’m wrong other than some other expert.

And then there’s this.

The Keynesian blight continues reaching even new lows of idiocy

How is this for being completely out to lunch: The bicycle is the slow death of the planet?

General Director of Euro Exim Bank Ltd. got economists thinking when he said:

“A cyclist is a disaster for the country’s economy: he does not buy cars and does not borrow money to buy. He does not pay for insurance policies. He does not buy fuel, does not pay for the necessary maintenance and repairs. He does not use paid parking. He does not cause serious accidents. He does not require multi-lane highways. He does not get fat.

Healthy people are neither needed nor useful for the economy. They don’t buy medicine. They do not go to hospitals or doctors. Nothing is added to the country’s GDP (gross domestic product).

On the contrary, every new McDonald’s restaurant creates at least 30 jobs: 10 cardiologists, 10 dentists, 10 dietary experts and nutritionists, and obviously, people who work at the restaurant itself.”

Their only unit of account is job numbers, not wealth creation. It never occurs to any of them that the resources not used one way will end up being used somewhere else, and often in a more productive – that is, growth-inducing – way.

Lies, damned lies and the National Accounts

We close down much of the economy for more than a year and this is where we supposedly now find ourselves: Economy back in record recovery. And looks who the star of the recovery has been.

Australia’s economy is larger than before Covid-19 triggered the worst recession in a century, with GDP lifting by 1.8 per cent over the first three months of the year to confirm the most rapid recovery from a downturn in peacetime history.

National accounts figures from the Australian Bureau of Statistics show quarterly economic activity reached $501 billion in real GDP terms, 0.8 per cent above the pre-pandemic peak of $497 billion in the December quarter of 2019.

The economy grew by 1.1 per cent over the year.

Victoria was the best performing state, with its final demand jumping 2.3 per cent in the quarter as the momentum from its delayed reopening late last year carried into early 2021.

If you would like something a bit more realistic so far as the economy is concerned, there is this chart below on seasonally adjusted growth in wages between September 1998 and March 2021. A very dismal story and these have not even been adjusted for movements in the price level.

The National Accounts are an absurdist Keynesian form of misleading indicator that never tells you what you really want to know, unless you know where to look and how to interpret what you read. Despite what that GDP stats might say, living standards are falling and are only going to get worse, assuming they ever get better again.

For more on just how much of a junk science Keynesian economics is, I invite you to have a look at THE GEEK IN PICTURES: KEYNESIAN CRIME WAVE EDITION from Steve Hayward at Powerline. I will only take in one of his graphs which is this: The Number of Democrats relative to Republicans for Each Academic Discipline. Even economics has 5.5 Dems for every Republican – a left-right balance of 5.5:1 – which is why Keynesian economics remains the standard issue nonsense that it is.

LET ME ADD: I probably shouldn’t buy into this since it will be misunderstood at every level but the question of my interest in rising real wages was mentioned in the comments. As it happens, I used to write the employer economic submissions to the National Wage Case from 1980 through until 2004 and even presented the employer submission from 2002 to 2004. And if you will note, during my time within the system, wages continued to rise, which was, in fact, the aim of every one of us who were party to wage fixation in those days. Real wage increases without inflation was the gold standard which was the outcome we all sought.

Alas, it has always been a mantra on the Coalition side of the fence that wages should be left to the market with no institutional interference of any kind, the sort of system that exists absolutely nowhere in any place on earth. In fact, Australia had, and may still have, the best wage fixing system in the world which is based on ensuring money wage growth is kept within the limits permitted by the growth in productivity. Of course, Labor has even less of an understanding of these issues, but was saved time and again by decisions of the centralised system which made the effort to encourage money wage restraint but higher output per hour worked.

It is a bad business that this ethos has disappeared from our wage system along with the outcomes which were not so long ago absolutely routine. There are probably  a host of reasons but I have been away from it for too long to know what they are. But if anyone believes that higher government spending and an enlarged public service are part of the answer, they could not be more wrong. That is a large part of what has gone wrong with very little indication, given the deficits that are now being routinely run, that anyone will anytime soon figure out what needs to change, or will be able to put those changes into effect.

What to start worrying about next after Covid disappears

Both from Drudge at one and the same time.

Do deficits matter anymore? Biden’s first budget signals they don’t…

And then this at the very same time.

Biden pledges to tackle supply shortages as prices rise…

Let me note that it takes a year or so for price increases to catch fire since consumer demand stays mostly the same while investment, and massive increases in public spending in general, are diverted into useless unproductive channels. Eventually, however, the flow of money expenditure begins to grow more rapidly than the flow of actual goods and services to buy.

Seen the price of houses lately?