OTOH, inflation is a rise in M2 money supply, which only the FED can do and does do thru its "magical money computers".
Posted on 07/18/2025 8:44:21 AM PDT by LibertyFound
OTOH, inflation is a rise in M2 money supply, which only the FED can do and does do thru its "magical money computers".
This simple economic reality was lost when globalist took over after wwii.
Will tariffs impact demand? I don't see how. Will tariffs impact supply? I guess they could in certain niche markets, lower the supply which would raise prices. But in markets where the tariffs won't lower supply to raise prices, IMHO the tariffs won't raise prices. Why? Because if the good would sell at that raised price, the price would already be at that height anyway. So in the end, the tariffs will be eaten up by the producers and/or the retailers. Again, except for niche markets where the price is barely above production and transportation cost.
But only deliberate central bank action causes inflation, though politicians may cause it at one remove.
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Very interesting point about inter-country competition. Not something anyone else seems to be talking about.
There’s supply v. demand, and then there’s indifference and substitution. When a good becomes too expensive, one has a choice between suppliers or some other completely different use of their money.
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I agree that Tariffs are not causing inflation, but the author’s analysis is simplistic, too academic, and wrong.
In most imported / tariffed goods, there is NOT a perfect market and buyers can not simply “buy American” or choose a country with a lower rate. Certain electronic items will only come from China. Certain imported foods can only come from certain countries, etc... Tariffs will increase these costs
Moreover, it will take years for American manufacturers to build factories in the USA, to replace China or other sources.
Rather, the reasons we have not seen inflation are:
- Energy prices remain low. Energy is the master-cost, which affects literally every producer and seller. Trump gets this, and is not only unleashing oil production, but is encouraging uranium/nuclear. We must be an energy superpower, because it’s the base of the entire economy.
- Media hype and politics make us believe imports are very large part of the economy, when they in fact are not. That’s not to say China (or others) do not have control over some strategic inputs, which must be remedied, but in economy-wide dollar terms, its not large
- American business’ major costs are domestic costs - labor, health-care, energy, rent/interest, etc...
- A large part of the US economy is service. Again, this is based on people and technology. all domestic inputs.
This is only half true. What is often overlooked in this conversation is the impact of money velocity, not just money supply. I suspect money velocity has declined in recent months simply because people and businesses are dealing with more uncertainty now than they were before.
It was a pretty obvious that tariffs would not increase prices or ,if they would, the price increases would be be minimal in most cases due to price pressure from domestic competitors.
Have been watching importers who tried to pass the tariff fees on to their consumer base and prices are rapidly dropping back to pre tariff levels - and below in some cases as they are forced to liquidate stagnated inventory that is not moving at the higher prices.
The so called economists who predicted economic doom and gloom due to Trump tariffs are either morons who have no idea of how the economy really works or they agenda driven hacks who were lying - or both.
Lets have a real analysis wants that has been implemented for several months. We get to see that soon, as of now, companies have been front loading material in preparation of tariffs.
Good luck out there, Aug 01 is the deadline, lets see if the Admin kicks the can down the road again. We had a week of Tariff rates and the market sold off. Tariffs have to be high enough to help spur domestic manufacturing, small tariffs will likely not help our production values.
Completely static snd incorrect thinking. You: if product a is not made in the USA then product a will never be made in the USA. This plain wrong. Ps: two new washing machine factories just opened in SC.
Where did I say THAT? Stop making stuff up.
NO. I said there is not a perfect market for imported goods as the article implies. Many things bought abroad at this moment only come from abroad. If you want rare-earth magnets for EVs, then you must go to China. If you want frozen orange juice, you must go to Brazil. Tariffs will cause prices of these inputs to rise, but such imports are not a large part of overall US economy.
These can be made in the USA, but it will take time. Tariffs are an attempt to fix these imbalances.
actually money velocity over the past 9 months has remained relatively stable:
Quarter Ending M2 Velocity
Mar 2025 1.386
Dec 2024 1.389
Sep 2024 1.387
Jun 2024 1.382
June numbers aren’t available yet, but April was 1.383
Labor is the main difference in cost. Small tariff is really all that is needed to promote domestic industry.
The rates have to be high enough to bring in production value here than than having production in other areas. If rates are still low enough for chinese productions, then they will still do it there. That’s part of the reason we’ve been sold out for decades.
No, it only takes a little to change the dynamic. The big difference is labor. Mass produced items labor is a small part of production A few pennies on the dollar is all it takes to repatriate prod. The data says I am correct.
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