A meeting of the American Central Bank, the legendary Fed, was held on 15 December and what has been decided can be summarized in three points.
1. The US economy is able to absorb the growing consumer demand without increasing inflation.
2. Even if the prices of raw materials are rising this will not impact the price of the final goods.
3. In short, inflation is not a serious problem.
These conclusions, as mentioned, are signed by the Fed, but the December we are talking about is that of 1965. After a month or so began the most serious inflationary crisis that the living can remember: that of the crazy 70s. Never was a prediction more contradicted by reality.
And today, despite the assurances of the central banks, it seems that the assurances and also the conditions of the economy are quite similar to those of 1965. Let’s face it: today the risk inflation, despite politicians and bankers, pretend nothing has happened it is very high. And as prices rise, it must be remembered, there are losers and winners. Perhaps we need to prepare ourselves or we are content with official explanations. Taking the American situation, one must tremble.
therefore in May there was the first signal. Which should not be underestimated. Just as the failure of the first funds was underestimated in that summer, which anticipated the subprime crisis in 2007. American inflation has grown by 5 percent on an annual basis: the highest in fifteen years. But if we look at the increase in core prices, that is the one less subject to the influence of seasonal variations, the jump seems to be reduced to 3.8 per cent. But such growth had not occurred for thirty years.
In short, the thermometer measures the onset of a fever that has not been seen for years. Economists, politicians and journalists think the inflation beast has been defeated once and for all: for at least forty years it has no longer been a problem. Kept under control by the monetary policies adopted by central banks. High interest rates to combat rising prices, and low interest policies when the economy was down. Today this law has been canceled. Add to this that, due to the pandemic, not only central bankers are lending at zero rates, but governments are also adopting very generous fiscal policies.
The Fed has low interests, like the ECB. But not only. It buys 40 billion in mortgages and 120 billion in bonds every month. By placing a lot of liquidity on the market, which had never been seen before. At the same time, the US government is spending like there is no tomorrow. In just two years it has deployed (between Trump and Biden) public resources for 6,000 billion dollars: three times the Italian GDP and a third of the American one.
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