The fiscal response (government spending programs) was sufficient. When Covid came in 2020, central banks should not have increased QE, he said they should just have done no easing.

It is common sense that too much money chasing too few goods leads to higher prices, and “you can’t explain inflation without money.” If you are increasing the money supply at 20% a year, you have to explain why that won’t lead to inflation, he asserted.Ĭentral bankers refused to face the issue that QE was really money printing, and he attacked policies of the Fed and many other central banks, saying that if you find supply contracting, the last thing you want to do is boost demand. 'It is 'bizarre' for central bankers to stop thinking about money,' he said. Mervyn King, former Governor of the Bank of England, rebutted some of Powell’s comments without directly attacking him. The money supply “(doesn’t) play an important role in our discussions.” Money Matters Whatever caused prices to move up after the pandemic, “I will say that the relationship of monetary aggregates to prices has changed” since Milton Friedman’s days. As an example, he said that the demand for cars rose because people wanted to avoid public transportation. Powell started by asserting that “none of this high inflation would have happened without the pandemic.” The pandemic contributed to increased demand and reduced supply. The headline speaker was Federal Reserve Chairman Jerome Powell, who sat for a Q&A with Cato president Peter Goettler.

Last week I attended virtually the always excellent Cato Institute Monetary Conference.

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