For most of the world’s inhabitants, so long as they reside connected to some form of modern economy inflation is an unwelcome event even in the smallest doses. Central banks have made it their very business to control it, or at least its form in consumer prices, in order that their assessment of the Great Depression might not be ever repeated. From that mistaken view of history, which only serves to carve out a more than technical role for economists within the political structure, almost everything a central bank does is in some way related to “controlled” price increases.

The obvious rebuke to that effort has been the obvious destruction caused by asset bubbles in the 21st century whereby central banking is and has been at its highest settings. In the latest “cycle”, that point has been pushed beyond excess to extreme levels and yet there is startlingly little of it (official count of consumer prices, anyway). Not only does that betray the philosophical arrangement that supports the entire monetarist framework (“easing”) it might actually and completely substantiate that central banks don’t really know what they are doing.

Again, this is not a unique situation where other geographies are sailing along with QE-inspired monetary debasement; the debasement continues but without that expected “beneficial” byproduct. From Europe to Japan to America to China, all with central banks actively promoting consumer prices via rational expectations, this year continues to progress in the opposite as if the real economy and any anticipated financial mechanisms are truly unimpressed.

The latest “unexpected” setback came from the one country that finds itself at the very center of the gathering economic storm. Thus, “inflation” is not just a mangled attempt at measuring the idea with a degree of precision, it is and has become the very point of monetarism itself. The People’s Bank of China, self-described, has been dishing out monetary “stimulus” for almost a full year now. That has taken the form of six rate cuts and 300 bps in unleashed reserve requirements. And still “inflation” surrenders to none of it.

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