Employment is not the cause of inflation, federal spending is the cause

Who causes inflation?

I little peak says government spending rises, purple line, then ten year yield and inflation both rise right after, green and red lines.  Employment does not directly cause inflation. Notice this all happens in that order then we get the Grey Bar.



Business economists need to look at a graph now and then:

WSJ: Many business economists no longer believe fiscal policy is holding back the U.S. economic recovery, according to a new survey by the National Association for Business Economics.
For the past two years, economists surveyed by NABE have said fiscal policy uncertainty — including efforts to rein in the deficit — was constraining economic growth. In the latest survey released Monday, 57% said they no longer believed uncertainty was holding back the recovery. Only 38% said they thought fiscal policy was restraining the recovery, compared with 80% in March 2013.

 So let's help them out.

1988, Federal spending up, growth down, grey bar. 1998, federal spending up, growth down, grey bar. 2006, federal spending up, growth down. 2010 - 2015, federal spending stable, growth stable, no grey bar, so far.

I mean, which businesses exactly hire these boneheads, they cannot even read a graph?

From the same article, our brilliant central bankers:

Federal Reserve officials, including Chairwoman Janet Yellen and former Chairman Ben Bernanke, have warned that restrictive fiscal policy created headwinds for the recovery, rather than supporting it as it did during previous economic downturns.

OK, lets see. After the 82 recession, growth stable, spending down. After the 92 recession,  growth stable, spending down, after the 202 recession, spending never changed! It was straight up all the way through.  And, Obama's recovery, spending stable and down, growth stable.  Our central bankers need to learn a bit about equations of money flows and spend less time doing the Keynesian nonsense.