Wednesday, August 20, 2008

Inflation may be moderating

Inflation has been uncomfortably high. While soaring oil has been partly to blame, I believe the real problem to be easy money. However, the U.S. money supply looks like it may not be growing anymore, which should reduce inflation and strengthen the dollar, thereby increasing the buying power of households.

The Fed needs to raise rates. As important as easy money to Wall Street is for the economy, it needs to be considered in the context of households. I've been advocating for this since last year. Since then, CPI has popped from 2% to 5.6%.

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