"Inflation True Rate: M2 Money Supply vs. Official Measures, Federal Reserve Actions, and Impacts"

Recent inflation data, particularly the PC inflation report, showed a rate of 4.1% and a core PC inflation of 3.4%, the highest in nearly three years. Historically, core PC inflation typically ranged from 1%–2%, which encouraged policy makers to print trillions of dollars, but this led to persistent higher inflation. The transcript stresses that prices never reverted via deflation, so the cumulative effect of elevated inflation remains. Though the pace has slowed since 2021–2022, prices still rise faster than pre-pandemic years.

After raising interest rates and halting money printing to fight inflation, the Federal Reserve faced liquidity and market dysfunction—prompting a reversal with renewed money printing, compounded by an energy shock. PC inflation and CPI inflation have risen again, now at 4.1% and 4.2% respectively, with core PC inflation at 3.4%. The next Federal Reserve meeting is scheduled for July 29th, with CME FedWatch tool odds at 69% for maintaining rates and 31% for a quarter-point hike. The speaker is skeptical of a rate hike, attributing exaggerated odds to political factors such as President Trump and noting that betting platforms quoted an 84% chance of maintaining rates—significantly affecting payout risk.

The true rate of inflation, according to the transcript, should be measured by M2 money supply growth rather than CPI or PC inflation. From December to May, M2 grew by 3.13%, which annualized is 7.51%. The speaker claims this understates the cost-of-living rise for Social Security recipients, who may only get a 3% adjustment, calling it a "clever strategy by the government to shortchange social security recipients by using the CPI measure". The methodology of CPI and PC is criticized for relying heavily on surveys rather than direct price comparisons, and further manipulation is suggested through trimmed mean inflation, now at 2.4%, which excludes outliers and brings reported rates below targets.

Wage growth rates since 2022 (January 3.7%, February 3.8%, March 3.5%, April 3.6%, May 3.4%) have consistently lagged behind the annualized M2 inflation rate, and this disparity explains why more Americans struggle with bills, housing, and Social Security. The Federal Reserve’s inflation target has shifted from 2.0% to 2.9%, and with trimmed mean inflation meeting that level, the transcript argues there is little pressure for further rate hikes. The speaker concludes the gap between reported inflation and true inflation is compounded yearly, undermining income growth and financial security, and asserts that the reported rates are deliberately understated by policymakers for political and fiscal reasons.