9The evidence
The facts
Text 02’s figures at their sources
- Seven figures, each traced to its source. All hold: one on a date, two as projections.
- The cause is another matter. Of the 3.8 points, energy alone carried about 1.27 BU4 · not shown.
- The committee’s own aim: “inflation at the rate of 2 percent”.
- Over fiscal 2026 the Fed’s Treasury holdings grew by 18.1 percent of the deficit; net, its securities by 8.8 percent.
The numbers Gavin cites are right. They don’t show that new money caused the 3.8 percent inflation: energy prices alone made up about a third of it.
What the grades meannine grades, from the firmest to the weakest
- statedThe source says it in its own words, and the study quotes them.
- it followsLogic alone gets there from what is stated, and a computer solver checks the step.
- strong supportThe evidence for it far outweighs the evidence against it.
- moderate supportMore of the evidence points for it than against it, but real evidence points the other way.
- one readingThe words allow it but do not require it; another reading fits them as well.
- left openThe evidence does not settle it either way.
- weak supportSome evidence points for it, but more points against it.
- not shownIt is claimed, but the record does not establish it.
- ruled outThe words or the logic exclude it.
A chain is only as good as its weakest link: a conclusion never gets a better grade than the weakest step it needs.
Read in full990 words · the study as written
Text 02’s figures hold at their primary sources, one of them only on a date. Its causal claim does not hold as stated. In the twelve months to April 2026 energy carried about a third of the rise in consumer prices, and over fiscal 2026 the Federal Reserve’s securities rose by 8.8 percent of the deficit, net. Each figure below is stated as its source gives it, with its date.
Text 02’s seven figures
| Text 02 says | At the source | Verdict | |
|---|---|---|---|
| F1 | “gross national debt stands at $38.91 trillion” (as of May 2026) | Total public debt outstanding was $38,910,619,550,278.10 on May 5, 2026, and ran from $38.88 trillion (May 1) to $39.21 trillion (May 29). Treasury, Debt to the Penny. | holds on a date |
| F2 | “debt held by the public exceeding 100% of GDP” | “Federal debt held by the public rises from 101 percent of GDP this year to 120 percent in 2036”. CBO, The Budget and Economic Outlook: 2026 to 2036 (Feb. 11, 2026). | holds |
| F3 | “the FY2026 deficit projected at $1.9 trillion” | “The deficit totals $1.9 trillion in fiscal year 2026” (CBO, Feb. 11, 2026). The year closed at $1,992,473 million (Treasury, final Monthly Treasury Statement); CBO: “The federal budget deficit totaled $2.0 trillion in fiscal year 2026”. | holds as a projection |
| F4 | “outlays ~$7.4 trillion” | “federal outlays in 2026 total $7.4 trillion, or 23.3 percent of GDP” (CBO, Feb. 11, 2026). The year closed at $7,395,800 million. | holds |
| F5 | “revenues ~$5.6 trillion from enacted taxes” | “Revenues total $5.6 trillion, or 17.5 percent of GDP, in 2026” (CBO, Feb. 11, 2026). Receipts closed at $5,403,327 million, below the projection. | holds as a projection |
| F6 | “M2 exceeding $22.6 trillion” | Seasonally adjusted M2 was $22,804.5 billion in April 2026 (Federal Reserve, H.6, May 26, 2026), revised to $22,756.6 billion in the release of September 22, 2026. | holds |
| F7 | “CPI inflation of 3.8% over the twelve months ending April 2026” | “Over the last 12 months, the all items index increased 3.8 percent before seasonal adjustment.” BLS, CPI release for April 2026 (May 12, 2026). | holds |
What the 3.8 percent was made of
The BLS release for April 2026 gives the parts. “The index for all items less food and energy rose 2.8 percent over the past 12 months.” “The index for energy increased 17.9 percent over the past 12 months and the index for gasoline rose 28.4 percent.” Weighting each part by its March 2026 relative importance gives the arithmetic below:
- energy: 7.090 percent of the index × 17.9 = about 1.27 points;
- food: 13.560 × 3.2 = about 0.43 points;
- everything else: 79.351 × 2.8 = about 2.22 points.
The three sum to 3.92, not the 3.8 published, because the weights are March 2026 relative importances rather than those of April 2025, so the split is an approximation. Energy carried about a third of the twelve-month rise. Over the same twelve months M2 grew from $21,775.7 billion to $22,804.5 billion, or 4.7 percent (H.6, May 26, 2026). The figures show money growth and price growth side by side; they do not show that the one caused the other in that year (hard question 13).
The committee’s goal
Federal Reserve, 2025 Statement on Longer-Run Goals and Monetary Policy Strategy (amended effective August 22, 2025) The Committee reaffirms its judgment that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve’s statutory maximum employment and price stability mandates.
The committee names the rate of inflation it aims for over the longer run. A general rise in prices at that rate is the government’s own policy. That is the strongest fact in the record for text 01’s loop.
Who expands the money stock, and how much of the deficit it met
The Federal Open Market Committee directs open-market operations (12 U.S.C. § 263(b)). Federal reserve notes are issued “at the discretion of the Board of Governors” (12 U.S.C. § 411). The Treasury borrows within a limit set by law (31 U.S.C. § 3101(b)).
Over fiscal year 2026, from the week ended Oct. 1, 2025 to the week ended Sept. 30, 2026, the Federal Reserve’s holdings of Treasury securities rose $360,668 million, and its mortgage-backed securities fell $186,134 million. Its securities rose $174,534 million in all, and the reserve balances banks hold at the Reserve Banks fell $18,004 million (H.4.1, Oct. 1, 2026). The fiscal 2026 deficit was $1,992,473 million. The central bank’s Treasury holdings grew by 18.1 percent of the deficit, and its holdings in all by 8.8 percent.
Prices under the gold dollar, 1913–1922
From 1900 until the proclamation of January 31, 1934, the dollar was fixed by statute at 25.8 grains of gold nine-tenths fine. Over those years consumer prices still moved (BLS, historical CPI-U, annual averages, 1982–84 = 100). The index stood at 9.9 in 1913, rose to 20.0 in 1920 and fell to 16.8 in 1922.
A gain counted in 1913 dollars was a gain in a fixed weight of gold, not in fixed purchasing power: the same gold dollar bought half as much in 1920.