How inflation hides our real economic problems

 How inflation hides our real economic problems

Everybody’s worried about inflation. Year-over-year price increases reached 5% in May. Market watchers and financiers are on red alert. Sen. Ted Cruz recently warned in these pages about the destructive aspects of a depreciating dollar. As prices start to rise faster than wages, many people are wondering how they’ll make ends meet.

Strange as it may seem, however, inflation is a smokescreen. It’s covering up far more serious problems in the economy. Those problems stem from the fact that the Federal Reserve, our central bank, operates as a law unto itself. As I, Peter Boettke, and Daniel Smith argue in our new book, Money and the Rule of Law, Americans won’t enjoy the blessings of financial stability until Congress reins in the Fed.

Inflation is less worrisome than supposed because it’s likely to be temporary. The combination of extraordinary monetary policy, massive fiscal stimulus, and lingering pandemic bottlenecks means…

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