Sundance, over at The Conservative Treehouse, had an excellent post on March 7th that explains in clear language how a hot economy doesn’t need to trigger high inflation rates.
Sundance has used his blog to champion the idea that President Trump is concentrating on “Main Street” instead of “Wall Street”, and sees these as two very different components of the American economic structure. The gains we have seen in GDP and employment, that have clearly baffled the “experts” of the Deep State, are easily understood if seen through the eye of the makers and consumers of actual, hard products.
Using the making of bread as a metaphor, he explains how…
…improved gains in efficiency/productivity (more bread needed) supports faster economic growth without generating higher inflation; no need to raise prices because your cost to make each loaf of bread decreases the more you make. Higher sales and lower per unit cost means more profit for the bread-maker. No need to raise prices. Without inflation, there’s no motive for the Fed to raise interest-rates.
Our fantastic performance is lifting up all classes of American, from farms to city center to suburbia to those who live in the trucks they drive to deliver our goods — without sparking some kind of murderous inflation, e.g., what we saw during Jimmy Carter’s reign, when we first started to idolize the “service economy”.
As we can see overall real wage growth continues to outpace inflation by about 1 percent. That means more money in workers pockets, and more actual disposable income.
For details, head on over to the Treehouse and read the whole thing.
Yet again, Donald Trump is so far over the experts’ pointy heads that they can’t see him coming until reality smacks them squarely in the face.