The economy is tanking. We recommend two America First precious metals companies. Our Gold Guy delivers personal service with no gimmicks. JD GoldCo offers a wide array of products. You can’t go wrong with either (or both).
Everyone is talking about inflation. And rightly so. The consumer price index (CPI) grew by 5.4 percent from June 2020 to June 2021. That is a far cry from double-digit inflation. Nonetheless, comparisons with the 1970s abound.
Article by William J. Luther from AIER.
Economists are quick to point out that we should be careful citing year-on-year growth rates this year. Last year was very, very unusual. And last year serves as the base for this year’s year-on-year growth rates. The high inflation rate observed in June, for example, might indicate that the price level was high in June 2021, low in June 2020, or some combination of the two. With this problem in mind, I have half-jokingly suggested we all just stop presenting year-on-year growth rates until July 2022.
Proposal: Everyone stops using year-on-year growth rates until July 2022. #TeamLevels https://t.co/jyvOOHsaWh
— William J. Luther (@WilliamJLuther) April 16, 2021
To consider whether the price level was too high in June 2021, we must first specify the relevant counterfactual—that is, what the price level should have been. To this end, it is useful to distinguish the trend (or, average) rate of inflation from the rate that results when inflation deviates from trend for a period of time and the Federal Reserve (Fed) takes steps to offset those deviations.
The Fed controls the trend rate of inflation. Conventional macroeconomic theory suggests it should set its inflation target equal to the optimal rate of inflation. Of course, there is some debate about what the optimal rate of inflation is. Some economists argue that it is slightly positive. Some economists argue that it is slightly negative. But most academic journal articles on the topic—and the most highly-cited journal articles on the topic—maintain that the optimal rate of inflation is zero. In practice, this might amount to targeting a slightly positive measured rate of inflation since conventional measures of the price level, like the CPI, tend to underestimate quality improvements and, correspondingly, overestimate inflation.
Whatever the optimal rate of inflation is, the welfare consequences of consistently targeting a rate that is a little too high or a little too low are probably small. Far more important is that inflation is in line with expectations.
When people enter long-term contracts, they do so with an expectation of inflation in mind. Business owners agree to pay a nominal wage with some idea of what goods and services they will have to forego in order to compensate their workers over the course of the employment contract. Borrowers agree to a nominal interest rate with some idea of what real resources they will have to give up in order to make monthly payments. And so on.
It is very difficult to distinguish a change in aggregate demand from a change in the relative demand for the goods or services one produces. If aggregate demand declines, inflation falls below what was expected when contracts were entered into and production tends to stall. It is not enough, in that case, for the Fed to increase the rate of inflation to what was expected at the outset, as that would result in a price level that is persistently below the price level anticipated when those contracts were entered into. Business owners would have to forego more goods and services to pay their workers the agreed upon nominal wage. Borrowers would have to give up more real resources to make their nominal monthly payments. And so on.
Gimmicks work for many precious metals companies. I despise gimmicks, which is why I recommend the straightforward approach of Our Gold Guy. If you want to buy precious metals, don’t get jacked around. Contact Ira.
In order to deliver a price level in line with what was expected at the outset following a period of time when inflation has been less than expected, the Fed must conduct monetary policy such that inflation temporarily exceeds the rate expected at the outset. It must make up for its past mistake by making an error of equal magnitude in the opposite direction. In doing so, it will cause the price level to increase back to where it would have been if its initial error had never been made and, in doing so, enable all those parties to long-term nominal contracts to continue honoring their agreements as expected, in real terms, from the start.
We know that inflation was relatively low last year. Is the inflation observed over the last few months merely a result of prices catching up to where they otherwise would have been in the absence of low inflation in 2020?
This is a tricky question to answer because it requires knowing (among other things) how much inflation was expected at the outset and how regularly long-term agreements are adjusted. But it is relatively straightforward to make some explicit assumptions, state a clear position, and then let others decide the extent to which those assumptions are reasonable––so that’s what I’ll do.
Here are my assumptions:
- The pandemic was unexpected prior to February 2020.
- Americans entered into long-term contracts prior to February 2020.
- Americans entering into contracts prior to February 2020 expected x percent inflation.
- Americans updating their contracts after February 2020 have done so under the expectation that the Federal Reserve would attempt to deliver an average rate of inflation in line with previously established expectations so as not to encourage over- or under-production.
From (3) and (4), it follows that those entering contracts after February 2020 also expected x percent inflation.
Of these assumptions, (4) is perhaps the most controversial. To the extent that contracts entered into prior to February 2020 have not yet been renegotiated and new contracts have not been entered into, it is of little consequence. But, of course, some contracts have been renegotiated or entered into anew. Still, it seems reasonable to think that most Americans expect the Fed will prevent over- and underproduction to the extent that it can, even if they cannot articulate how or why the Fed would do that.
Assumption (3), of course, is underspecified. What rate of inflation did Americans expect prior to the pandemic? I will consider two possibilities.
One might reasonably think Americans expected the Fed to continue delivering more-or-less the same rate of inflation as it had delivered prior to the pandemic. From January 2015 to January 2020, the personal consumption expenditures chain-type price index (PCEPI), which is the Fed’s preferred measure of the price level, averaged around 1.6 percent year-on-year growth.
Calories = Survival. Buy 364,720 Calories of delicious food today. Heck, buy two.
It would also be reasonable to think Americans expected the Fed would deliver the rate of inflation that it said it would deliver. The Fed has had an explicit inflation target of 2 percent since 2012. It revised its target to a 2 percent average inflation target in August 2020. Of course, the Fed consistently undershot this target in the years before the pandemic. And, for this reason, I think inflation expectations were probably closer to 1.6 percent than 2 percent. Nonetheless, one might reasonably maintain that 2 percent is the relevant rate. Considering a 2 percent rate also allows one to assess the extent to which Fed actions have been consistent with what it has said it would do.
The actual PCEPI is presented as a solid blue line in the following figure alongside the five-year (dotted blue line) and two-percent (dotted green line) PCEPI trends. The five-year trend is constructed under the assumption that the PCEPI continued to grow at a year-on-year rate of 1.6 percent from January 2020 to the present. The two-percent trend is constructed under the assumption that the PCEPI continued to grow at the Fed’s stated target rate of 2 percent from January 2020 to the present.
Obviously, some of the high year-on-year inflation rates observed in recent months can be attributed to catching up. However, it is clear from the preceding figure that inflation has not merely restored the pre-pandemic price-level trend. PCEPI has exceeded the five-year trend since February 2021. Inflation hasn’t merely been in line with the Federal Reserve’s two-percent inflation target, either. PCEPI has exceeded the price level required to maintain an average rate of inflation equal to two percent since April 2021.
The high rates of inflation observed in recent months might be transitory, as Fed officials claim. Short-term supply constraints might push up the price level temporarily without having a lasting effect on the trend rate of inflation. It might be too soon to worry that inflation—that is, a persistent increase in the price level—will get out of hand.
But it is simply not the case that the observed inflation has merely been what was required for catching up. The price level today is greater than what it was expected to be in the absence of a pandemic and what the Fed implicitly said it would be given its two-percent inflation target. The price level has more than caught up with expectations. The question, now, is whether it will continue to grow so rapidly, remain elevated, or subside.
American Patriots Uniting to Fight Tyranny from, Well, Everywhere
We’re building a new conservative news network. Based on responses from fellow patriots, we’re heading in the right direction.
It may be hard to believe based on what we’re seeing around the nation today, but there are many reasons to be hopeful. First and foremost, the false narrative that most of America hates traditional values or the foundations of our nation are finally being proven false. Despite the best efforts of globalists and Neo-Marxists, patriotic Americans are starting to unify in droves. Meanwhile, Joe Biden can barely muster a half-filled auditorium to deliver his message to the scant few watching CNN and the paid shills in the “crowd.”
The “silent majority” that drove Donald Trump to victory in 2016 and 2020 (yes, he won by a landslide but was robbed along with the American people) is finally starting to realize we cannot stay silent any longer. We used to win with our votes, but those are being stolen. We used to win with truth, but the radical left and their agents in mainstream media, Big Tech, and academia are building a post-truth society to drown out reality. Today, we are waking up to the realization that only through direct action and fearlessly spreading the truth can we overcome the nefarious forces working against us.
We are proud to be working our way up to the tip of the conservative media spear. Our network is growing. We’re establishing strong partnerships with like-minded news outlets and courageous journalists. Even as Big Tech suppresses us, the honest messages they’re trying to quash are finding their way to the eyes and ears of patriots across the nation. With the help of new content partners like The Epoch Times and The Liberty Daily, we’re starting to see a real impact.
Our network is currently comprised of nine sites:
- NOQ Report
- Conservative Playlist
- Truth. Based. Media.
- Freedom First Network
- Based Underground
- Uncanceled News
- American Conservative Movement
- Conservative Playbook
- Our Gold Guy
Some of our content is spread across all of these sites. Other pieces of content are unique. We write most of what we post but we also draw from those willing to allow us to share their quality articles, videos, and podcasts. We collect the best content from fellow conservative sites that give us permission to republish them. We’re not ego-driven; I’d much rather post a properly attributed story written by experts like Dr. Joseph Mercola or Natural News than rewrite it like so many outlets like to do. We’re not here to take credit. We’re here to spread the truth.
The slow and steady reopening of America is revealing there was a lot more economic hardship brought about from the Covd-19 lockdowns than most realize. While we continue to hope advertising dollars on the sites go up, it’s simply not enough to do things the right way. We are currently experiencing a gap between revenue and expenses that cannot be overcome by click-ads and MyPillow promos alone (promo code “NOQ” by the way).
To overcome our revenue gap and keep these sites running, our needs fluctuate between $2200-$7800 per month. May, 2021, for example, was amazing and we almost broke even. June, revenue was sluggish at best and we had to make up a big difference out of our pockets. But we’re not just trying to get out of the red. If and when we start getting enough contributions to expand, we will do just that. Very few get into journalism to try to get rich and we’re definitely not among those who do. Our success is driven by spreading the truth, profitable or not.
The best way you can help us grow and continue to bring proper news and opinions to the people is by donating. We appreciate everything, whether a dollar or $10,000. Anything brings us closer to a point of stability when we can hire writers, editors, and support staff to make the America First message louder. Our Giving Fuel page makes it easy to donate one-time or monthly. Alternatively, you can donate through PayPal or Bitcoin as well. Bitcoin: 3A1ELVhGgrwrypwTJhPwnaTVGmuqyQrMB8
Time is short. As the world spirals towards radical progressivism, the need for truthful journalism has never been greater. But in these times, we need as many conservative media voices as possible. Please help keep NOQ Report and the other sites in the network going. Our promise is this: We will never sell out America. If that means we’re going to struggle for a while or even indefinitely, so be it. Integrity first. Truth first. America first.
Thank you and God Bless,
Former NY Governor Andrew Cuomo didn’t listen to Dr. Zev Zelenko about Covid-19. Don’t be a Cuomo. Dr. Zelenko’s new Z-Dtox and Z-Stack nutraceuticals come highly recommended by many doctors.
We Often Feel Like David Taking on Giants
Today’s Goliath is the Mainstream Media Industrial Complex that brainwashes the masses.
Our mission is very straightforward: To counter the false narratives and nefarious agendas destroying America today. It isn’t easy for obvious reasons; despite incredible growth over the last year we are still a very tiny fish in a huge media pond. But we’re fighting and we will continue to do so, Lord willing, for as long as we possibly can. The battle for America’s present and future is too important for us to back down to the giants that stand in our way.
We need help. I don’t want to say “desperately,” but the need is definitely great. If you have the means, please donate through our GivingFuel page, PayPal, or our brand new GiveSendGo page. Your generosity is what keeps these sites running and allows us to get the truth to the masses. We’ve had great success in growing but we know we can do more with your assistance.
Thank you, and God Bless!