Federal Reserve Chairman Jerome Powell still believes that inflation and the money supply are unconnected. He first made this remarkable assertion in his Semiannual Monetary Policy Report to Congress last February, saying that “the growth of M2 . . . doesn’t really have important implications for the economic outlook.” Since then, the U.S. annual inflation rate has climbed to 7.5% from 1.7%, but Mr. Powell hasn’t changed his mind. He doubled down during congressional testimony in December, arguing that the connection between money and inflation ended about 40 years ago. The nearby chart shows otherwise.

By turning a blind eye to money, the Fed has allowed the printing presses to run in overdrive. The money supply as measured by M2, which is the Fed’s broadest measure of money in the economy, has been growing at record rates—with 39.9% cumulative growth since February 2020. M2 is still growing at an elevated, inflationary rate of 12.6% a year. Before the pandemic, you’d have to go back to the early 1980s to find a monetary growth rate this high.

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