We’ve had annual trillion dollar deficits for a decade now, and there’s no end in sight. After almost a decade of printing money (quantitative easing), a national debt of over $22 trillion, a red hot economy with record low unemployment, and an insanely inflationary fiscal policy, why don’t we have inflation?
According to the latest numbers, over the last six years inflation has averaged 2%. It hit 2.95 in July, and is back down to 2.2.
Inflation occurs when there’s too much money chasing too few goods and services, driving up their price. An antidote to inflation are productivity increases, which cause an increase in the supply of goods and services.
We’ve had such productivity increases since the rise of the internet. Here’s a Microsoft introduction to the concept. For some reason, traditional metrics of the economy don’t measure these productivity increases.
Perhaps it’s because they transcend the realm of business, and have made personal productivity increase dramatically. Anyone who’s used Google maps to navigate a big city knows what I’m talking about. I’ve saved countless hours of my time because of the internet, and none of that shows up in economic statistics.
There’s no inflation because of the internet. And productivity increases from the internet are just getting started.
For what it’s worth, I took two Econ courses at Cal, and got a C in both. In my defense, my professors were apologists or advocates of socialism.
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