The current inflation is mainly a result of lagged consequences of the pandemic trends, but as these trends are about to reverse, we may experience the disinflationary part of the pandemic soon.
Could you comment on the Saudis continuously pricing oil higher which is helping push inflation. Plus, if the Fed add 1% to prices by July 1st as Bullard expects how will CPI fall dramatically?
We learned from the pandemy how to create massive economic growth. As the service and travel sector was shut down, people saved huge amounts of money. And when people have extra money that they cannot spent into service, well, they invest it and creat new wealth for themselves.
And this created wealth is the same thing as real economic growth.
And this massive growth ended up that all resources were overehelmed and the prices of goods skyrocketed and created inflaation.
Notice that gross domistic product is useless economic indicator. That is because service sector does not contribute to new wealth generation but still service sector has high weight on GDP calculations.
how can 1 cohort saving money and therefore not spending money into the service and travel sectors generate economic growth? The money was parked in the savings accounts not being put to work in the economy. The only way economic growth occurred was when the governments pushed cash into the system. US GDP sky rocketed. GDP = private consumption + gross private investment + government investment + government spending + (exports – imports).
Could you comment on the Saudis continuously pricing oil higher which is helping push inflation. Plus, if the Fed add 1% to prices by July 1st as Bullard expects how will CPI fall dramatically?
I really enjoyed reading this, thank you!
We learned from the pandemy how to create massive economic growth. As the service and travel sector was shut down, people saved huge amounts of money. And when people have extra money that they cannot spent into service, well, they invest it and creat new wealth for themselves.
And this created wealth is the same thing as real economic growth.
And this massive growth ended up that all resources were overehelmed and the prices of goods skyrocketed and created inflaation.
Notice that gross domistic product is useless economic indicator. That is because service sector does not contribute to new wealth generation but still service sector has high weight on GDP calculations.
how can 1 cohort saving money and therefore not spending money into the service and travel sectors generate economic growth? The money was parked in the savings accounts not being put to work in the economy. The only way economic growth occurred was when the governments pushed cash into the system. US GDP sky rocketed. GDP = private consumption + gross private investment + government investment + government spending + (exports – imports).
Thanks Andreas for a timely and differentiated piece