Inflation is falling in spite of repeated, embarrassing predictions by opponents of President Donald Trump’s tariffs of both parties that prices would rise in response to his tariffs on Canada, Mexico, China and the rest of the world. It simply has not happened, with inflation the past 12 months now at 2.4 percent.
Of course, they need only have read Milton Friedman who taught us that ‘inflation is always and everywhere a monetary phenomenon’ with the critical factors being the money supply, which has not increased since 2022, and production which has been rising after the Covid-led production lockdowns.
Tax rates and tariffs do not determine inflation per se. The global supply crisis has been easing, but so too has demand as American households maxed out their credit. Total credit owned and securitized has actually declined by 1 percent the past 12 months, according to data compiled by the Federal Reserve.
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