Posted Aug 26, 2020 by Martin Armstrong
The Phillips Curve states that inflation and unemployment have an inverse relationship. Higher inflation is associated with lower unemployment and vice versa. The Fed is actually recognizing that the Phillips Curve is dead. I have been warning that the Quantity Theory of Money is also dead because all the tremendous increases in the money supply since the Great Recession 2007-2009 has failed to produce inflation or stimulate the economy. Instead, this has led to negative interest rates since 2014 which have undermined the entire Keynesian Model as well.
This is why the book I put out Manipulating the World Economy keeps selling out. All three editions are gone. Every time Amazon listed the books, they were gone in less than 3 hours. All of these theories were dealt with and this book has had a major impact already. Of course, the goldbugs and Bitcoin advocates hate my guts because it does not support the old theories they rely on which indeed were the VERY SAME theories used by the central bankers which have failed – increase the money supply produces inflation. This has led to many deep conversations about how these theories no longer work and what is the future.
The media is portraying the Fed will create inflation now in a big way. Those forecasts are still relying upon these old theories which have failed to produce anything these projections said were going to happen including hyperinflation.
CNBC claimed that the Fed was going to deliver a major speech that would change the way the Fed views inflation and that this will somehow effortlessly restore everything back to a normal inflation level. Missing in all of this remains CONFIDENCE. Not until people begin to look at these theories and how they have failed as is taking place in central banks behind the curtain, they will not grasp the risks of the future.