Inflation has always been about more than bothersomely high prices like a $3 cup of coffee or a $4 gallon of gasoline. And nowadays it also encompasses far more than Milton Friedman’s axiom that it reflects too much money chasing too few goods.
Under today’s policy regime, in fact, inflation is elemental, plenary, global and virulent. That’s because it’s the toxic spawn of unhinged central bankers who have flooded the financial system with trillions of fiat credits snatched from thin digital air in a manner that contradicts and defies every text book written before 1995.
Milton Friedman is not everyone’s idea of an oracle on the matter of money and inflation, of course, and by our lights he’s actually one of the great villains among the economic big thinkers of modern times.
But he did contend as a matter of common sense that high powered money, which is basically represented by the Fed’s balance sheet, shouldn’t grow faster than nominal GDP; and, ideally, it should be constrained to a fixed growth rate of around 3.0%—so as not to validate or finance a rising price level above the real growth capacity of the economy.