US Inflation and Global 🇺🇸 🌐💵�‪�‬ Modlin Global Analysis Newsletter

Welcome. Thank you for joining us for this edition of the Modlin Global Analysis Podcast. This week we are focusing on inflation, what it means, and both inflation in the international sense, with a number of countries and regions we're going to focus on. As well as in the United States, again, we're going to be talking about this monetary phenomenon, what prices? Changing and what they mean for consumers and how we define that and we're not talking about inflated egos or the inflated value of my baseball cards. We're going to emphasize the consumer aspects and the costs that they experience through this, and this week, I'm glad to be joined again by Dan Modlin, who has a series of interesting questions on inflation.
Dan
Kevin, we hear a great deal of talk about inflation, obviously, and a lot of people when they're in the grocery store certainly feel they're seeing the effects of inflation, but. I wonder if it might be a good idea just to start with an actual definition of inflation.
Kevin
Great question. First off, I feel that sentiment as well. I'm one of those penny pinchers and I go through the grocery and I notice when butter and bread go up $0.10 and think about ways I can compensate for that. But inflation is about the increase in prices. And they're different people that have debates about what causes inflation. And everything, but it's first important to note that this is about the increase in price across the board. For consumers, so if. The price of gasoline, or the price of Wheaties increases dramatically. That is not inflation. That is a phenomena related to the supply and demand dynamics of those goods. This is an across-the-board phenomena where a large basket of goods. Have increased in price overtime and that it is noticing that. It's a distinct phenomena that has to do with the supply and demand for goods and services, but how this intersects with the quantity supplied of money and we know throughout history and we know throughout American history. Inflation is caused by a lot of extra money in the economy, so that individuals need to use more money to buy a similar amount of goods that they could buy a few months earlier.
Dan
Let's talk a little bit about that. We hear obviously the partisan politics a lot discussing this. Your legislation causes inflation and your legislation causes inflation and these kinds of accusations float around a lot. But let's talk about the basic causes of it. What do we see as primary causes of this trend?
Kevin
Yeah, that's a great question. And what's important with that also is, is that there's a rich debate about this. And so it's not just a debate among policy actors. There's a debate amongst the academic classes and what they think about that. One of the things is it relates to the conversation, the points that we just had is people will associate increases in prices and say that that is all inflation when in fact it can be changes in supply and demand. If producers decide to dramatically reduce the supply of oil or reduce the supply of Wheaties. We can expect the price to increase, and that is related to. And to the global market, having the demand for those products, that is a very different question than the global supply of money and specifically the supply of money within the United States and now which is circulating throughout the economy. So our both our policy actors. In the Federal Reserve. We'll try to regulate the supply of money in an effort to control inflation, and we'll have to have a very serious conversation to explain what went off the rails in the last few years. But it is true that certain policies can contribute to inflation. Both the two big effects are how much a country is spending and how much are they taxing. So how much is basically being put out there in the economy and circulating around? What are the trillions of dollars doing that and how much is being taken in through taxes that also regulate that, so that perspective? Is an argument of