The money supply predicted inflation’s fall. Who’s actually surprised?

Published July 17, 2023 10:00am ET



The news that growth in the much-watched Consumer Price Index continued to fall in June was greeted with virtual shouts of acclamation on Wall Street and elsewhere. At last, it seemed, the cold water the Federal Reserve has been throwing on the economy is quenching inflation’s flames. But while the news is good, it’s no surprise to observers of the money supply. Oddly, few, if any, commentators noted this in their reactions or bothered to remind us that money really matters. Why might that be so?

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