Quoth the Raven
· QTR’s Fringe Finance
· May 21, 2026 at 07:01
· ⏱ 7 min read
| Read on Substack ↗
Summary
The article argues that inflation has been redefined from a monetary phenomenon (money supply growth) to a price-level statistic (CPI/PCE), which obscures the role of central bank money creation in fueling asset price inflation and inequality. For markets, this means official inflation metrics understate the real cost of monetary expansion, potentially leading to policy misperception and persistent asset bubbles.
•Historically, inflation meant an increase in the money supply, with rising prices as a consequence (citing Hazlitt and Mises).
•Today's CPI and PCE definitions use substitution logic and exclude asset prices, so they may not capture cost-of-living erosion.
•The Cantillon Effect describes how new money flows first to financial assets via banks, benefiting initial recipients most.
•S&P 500 rose roughly 7x from 2009 to 2026 (~948 to 6700), while CPI rose only ~50% (214.5 to 321.9).
•Home prices (Case-Shiller Index) grew ~140% from 2012 low to end-2025, outpacing consumer price inflation.
•The article claims redefining inflation has allowed unprecedented money creation without public backlash and has contributed to asset bubbles and wealth inequality.