Former IMF Economist: U.S. Inflation Starting to Resemble Latin America

Desmond Lachman, an economist and senior fellow with the American Enterprise Institute (AEI), told Breitbart News on Sunday that the U.S. is beginning to resemble a Latin American country given its inflation, government spending, and printing of money.

Government borrowing and spending — marketed as economic “stimulus” by its proponents — combines with growing government debt and expansion of the money supply to drive inflation, Lachman explained.

“The real reason that one should be worried about inflation is that there’s far too much stimulus in this economy,” he remarked. “We’ve got the largest peacetime budget stimulus that this country has ever known. We talk about something like 12-13 percent of GDP, which is a massive budget stimulus by any reckoning.”

He continued, “But on top of that, we’ve got the Federal Reserve that keeps printing money. … We are seeing the money supply now growing well over 20 percent [year-over-year]. If you look at the broad money supply, that’s the fastest money supply [expansion] that we’ve seen in many, many years.”

Lachman spoke with Reuters last month, when the outlet reported on the Federal Reserve’s unprecedented printing of money:

Money supply — which measures outstanding currency and liquid assets — rose 12% year-over-year in April, according to The Center for Financial Stability’s Divisia M4 index including Treasuries.

The measure has been running between 22% and 31% each month since April 2020, fueled by unprecedented economic stimulus from the Federal Reserve and U.S. government. That compares with annual growth of around 3-7% that was common from 2015 to early 2020.

He concluded, “Milton Friedman’s argument — which is widely accepted — is that inflation is everywhere a monetary phenomenon, So if you’ve got this rapid rate of money growth, you should be expecting that this inflation isn’t transitory. This could be here for awhile.”