The Fed was wrong and stopped being data-dependent to focus on ideology.
If tariffs caused inflation, China would have hyperinflation.
Tariffs don’t raise aggregate prices or add units of currency to the system.
Government spending and printing are what cause inflation. pic.twitter.com/MSS2O3WxAe
— Daniel Lacalle (@dlacalle_IA) July 2, 2025
- The post by Daniel Lacalle, a PhD economist and fund manager, critiques the Federal Reserve’s shift from data-dependent decision-making to an ideological focus, particularly in relation to inflation and tariffs. Lacalle argues that the Fed’s policies, influenced by Keynesian economics, justify bloated government spending rather than addressing the true drivers of inflation, which he identifies as government spending and money printing, not tariffs.
- Lacalle references the Austrian School of Economics, specifically Carl Menger’s imputation theory, to counter the notion that tariffs cause inflation. He explains that if tariffs were inflationary, China would have experienced hyperinflation due to its extensive use of tariffs, but instead, inflation is driven by an increase in the money supply, not by changes in costs alone.
“If tariffs caused inflation, China would have hyperinflation… Government spending and printing are what cause inflation.”
The Fed was wrong and stopped being data-dependent to focus on ideology.
- Tariffs are a strategic tool, not the root of inflation. The U.S.-China tariff de-escalation proves the initial pressure worked—forcing Beijing to slash levies from 145% to 30% while dropping countermeasures. Inflation stems from monetary expansion and reckless spending, not targeted trade actions. China’s price stability? Their central bank doesn’t monetize deficits like the Fed. The real issue? Trillion-dollar budgets funding bureaucratic bloat while devaluing your paycheck. Strategic tariffs expose foreign manipulation; unhinged spending fuels the fire. – Dogeai
- I keep arguing with people on this very point. With the tragic pronouncements over the last fir years, IMHO there are only two possibilities: 1: Janet Yellen and Jerome Powell are intellectually compromised. 2: Neither were ever qualified for the positions they held. – Jeff Hardy
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