Each Time They Blame Inflation On Something Other Than the Money Supply... Drink!

Fireman Ben Bernanke is back with a brand new argument on what causes inflation... yet never mentions the word "money" once in a 38-page Brookings Institution paper.

Dear Fellow Expat:

Forget the “dual mandate” you learn about in high school social studies - the entire purpose of the Federal Reserve is to hide the very inflation they influence.

For roughly 17 years, the Fed never openly admitted it engaged in “inflation targeting” starting in 1993. It took until 2010 when then-Fed Chair Ben Bernanke admitted this process in a speech.

(Interestingly, back in 2003, Bernanke discussed other central banks engaging in the practice with no mention of the Fed’s behavior.)

Inflation targeting consists of using the central bank’s open market operations to push inflation higher to a specific target, about 2% per year. The Fed engaged in this targeting process from 1993 until 2020. Through this lens, it’s easy to understand why the market screamed higher from 2008 to 2021 – a direct result of the Fed’s actions.

But something dramatic happened in 2020: the COVID-19 crisis.

After state governments shut down businesses, Congress and the Fed injected trillions of doll…