Thoughts on inflation, the recent rally in equities, and its political and diplomatic significance (longer read)
*Given the recent quietude in markets, I'm taking this month's blog post as an opportunity for a longer read. We've seen a lot of vigorous debate over the past few months about inflation vs deflation, bull market vs bear market, and the political implications of the Covid-Era. This is meant to be an addition to that debate.* This expository is meant to be a refinement of the previous discourse on the structure of the macroeconomy. Careful attention will be given to our ideas about inflation, where they might be flawed, and how those flaws are leading to our misunderstandings in legislation. It will then give a possible explanation for recent moves in equity markets in light of employment numbers near Depression levels. I am writing this with the motivation to disprove the Friedmannian idea that, “inflation is always and everywhere a monetary phenomenon.” This is not the case, as there is a distinction that must be made between the real and fin...