Gas is going for more than $4 a gallon, gold is riding a boom, and the Federal Reserve is seemingly complacent about these developments. Among critics of President Obama and Federal Reserve Board Chairman Ben Bernanke, the consensus is clear: Inflation is making a comeback. “The Bernanke policy of printing money is setting the stage for massive inflation,” claims former House Speaker Newt Gingrich. Rep. Ron Paul, R-Texas, decries “the inflation all Americans suffer due to the Fed’s relentless monetary expansion.” Former Sen. Rick Santorum, R-Pa., fears not just inflation but “potentially hyperinflation.”
The claim has a surface plausibility. If the money supply is growing and prices are rising, what more evidence do we need? But first impressions, in this case, are badly misleading.
