The latest reading from the Billion Prices Project clearly confirms the latest CPI readings from the government (thanks to Joe W). This index appears to debunk many of the known conspiracy theories about the government’s inflation data. The latest reading of just over 2% confirms much of what Ben Bernanke has been saying over the last year – that inflation would prove transitory.
But perhaps more importantly it proves that the hyperinflationists and conspiracy theorists have once again been proven entirely wrong about the inflation outlook. Personally, I think these misinterpretations are rooted in a vast misunderstanding of the modern monetary system (see here) and more general misunderstanding of what exactly hyperinflation is (see here for more).
While I believe inflation is likely to tick higher from here I think it would be foolish to start believing any of those past conspiracy theories now. As I’ve long said, higher rates of inflation were likely to be accompanied by one primary factor – a strengthening economy. And that appears to be the case that is currently unfolding.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.