MINT HILL, NC – If there is one thing you should know about Fulcrum Wealth Advisors, it’s that the President, Christopher Kemper, likes to study Milton Friedman. Milton Friedman famously declared that inflation is “always and everywhere a monetary phenomenon.” While it’s hard to disagree with a legendary economist, monetary economics don’t quite capture real life and how we’re feeling today.
For many, inflation brings back 1970s-era memories of long lines at gas stations and ballooning mortgage rates. If inflation persists for too long, it can spur people to make panic or bulk purchases which can drive prices even higher. We haven’t seen this scenario play out yet because the US economy is slowing and reducing demand.
As a refresher, inflation is measured by the Consumer Price Index (CPI), which calculates the average monthly price that consumers pay for a basket of goods and services. The components of CPI include the following: Services (excluding energy), Commodities (excluding food & energy), Food away from home, Food at home, and Energy. By recently raising interest rates to combat inflation, the Fed is accelerating the lower growth phase of the process. Do you think this means prices will fall? Reach out and let us know your thoughts.
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This article was written by AssetMark for general public use by your local Cambridge Investment Research Financial Advisor.
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