This article was published by the McAlvany Intelligence Advisor on Wednesday, June 12, 2019:
When President Trump tweeted “The United States has VERY LOW INFLATION, a beautiful thing!” on Tuesday morning, he was referring to the latest PPI numbers from the Labor Department. For May, its Producer Price Index came in at a benign and nearly invisible 0.1%. Year over year the PPI was just 1.8 percent, down from 3.1 percent last summer.
Trump should have been referring to the quiescent Fed, which is in a state of confusion. By this time, according to standard interventionist (Keynesian) theory, a 10-year-old economic expansion should be exhibiting signs of inflationary pressures. Instead, real price increases are approaching low levels not seen in years.
The Fed chair Jerome Powell has repeatedly stated that his “target” is 2.0 percent inflation. His reasoning?