The last time inflation was this low, there was a recession

Back in 2006, inflation slowed dramatically to 2.4 percent and was 4.4 percent in 2008. Then a recession hit, and a new administration came to power. Inflation dropped significantly this year and now sits at 4.1 percent, about the level back in 2008, just before the recession. Bill Maher recently quipped that he wanted a recession as a means to push President Trump from power. Others may agree with Bill and are putting the gears in motion. See table below showing the growth in the quantity of dollars (aka inflation and aka money supply).

Table showing inflation rates from 2003 until 2018.

I am also cheering the lower inflation rate since creating new dollars steals value from all existing dollars. There is less theft.

Yet, I also dislike wild swings in the quantity of dollars as that confuses people. High inflation can lead to energy going into a specific business sector, then a sudden drop can cause those businesses to fail, as they had mistakenly planned on persistent easy money and loans, and the resulting high spending.

It’s best to have zero inflation. If we can’t get that, let’s have steady low inflation. But I do not want wild swings in the inflation rate and especially a swing designed to influence an election.

Underlying data:

Data for FRD Quantity - 2018.08 v01

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