Decreasing Rate of Inflation

It’s still inflation, and it’s still growing. Wall Street Journal editors point out that

The 12-month inflation rate fell to 7.1% in November, which is down from 7.7% in October and is the fifth annual rate drop in a row since inflation peaked at 9.1% in June.

That decline, though, is against a higher rate of inflation that year ago—2021—than in 2020, the last year of the prior administration, which also was the last year of our economic burgeon.

In addition, greatly mitigating any beneficial effects of that reducing inflation rate, the prices generated by that inflation persist, and they will into the future. Those prices will be paid—into that same future—out of real wages that have shrunk by 3% year-on-year.

All of which suggests the Federal Open Market Committee (FOMC) has good reason to stick to its leaked intention to lift rates by another 50 basis points on Wednesday.

No. The Fed should have stuck to its 75 basis points (0.75%) benchmark interest rate increase pattern, instead of its meek .50% increase of last Wednesday. Kill this inflation spiral. Kill it dead. Dragging things out only runs up the costs for us average Americans who continue to pay those increasing prices with shrinking dollars.

Even those editors seem to agree:

The better policy is to break inflation now and return sooner to the Fed’s target of 2%. That’s a stronger foundation for growth and a rising standard of living for workers whose budgets have been savaged by inflation.

The Editors’ headline is spot on: Inflation Isn’t Vanquished Yet.

Far from it. And neither are its pocketbook effects.

Blockchain and Cryptocurrency

Lots of folks tout cryptocurrency as the be-all and end-all of currency and liberation of our money from Evil Government.

However.

Here’s a bit about blockchain.

A blockchain is a distributed database or ledger that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. … The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.

Guarantees the fidelity and security of a record of data—the fidelity part of that is that each transaction of good in a sequence of transactions is explicitly tracked and its provenance known: who or what did the transaction and who or what received the transaction. At every step of the way from first origin of the first transaction to the last recipient of the last transaction.

Here’s a bit about cryptocurrency, using the hoary Bitcoin as a canonical example.

The key thing to understand here is that Bitcoin merely uses blockchain as a means to transparently record a ledger of payments, but blockchain can, in theory, be used to immutably record any number of data points.

Cryptocurrencies use blockchain—and that ledger, here, of payments (from whom or what to what or whom)—to track the financial transactions.

That immutable record of transactions is just what governments love to have in order to track their subjects’ doings.

Cryptocurrencies are encrypted, though—that’s the “crypto” part. Except that any encryption mechanism can be cracked, and governments have the resources to do exactly that should the men in government decide they have a “need” to.

On the other hand, cash transactions still are untrackable.