photo of Janet Yellen
By Charles Stampul
Americans are about to get a long overdue lesson about inflation. It may come as a shock to many CNBC viewers and those working in finance or holding advanced degrees in economics might attempt to refute it, but the word actually means what any child who has used a pump to put air in a ball or tire, might guess. Take out an old dictionary and you will see it’s true. Inflation is not an increase in Consumer Price Index (CPI) or Producer Price Index (PPI), or the Personal Consumption Expenditure (PCE), even if those indexes accurately measured rising prices, which they doubtfully do. Inflation, instead, is the act of increasing the supply of currency. Rising prices is the effect of inflation, not inflation itself. The distinction matters.
