Hacker News new | ask | show | jobs
by omalleyt 1874 days ago
Month-on-month inflation was 0.6% last month, with much of the economy still closed (which should be deflationary).

That’s a 7.5% annualized rate.

1 comments

Sure, I agree that if the trend continues for a year, then we should start being concerned.

But inflation has been below 2% since December 2018, and interest rates are at zero (which gives the Fed considerable latitude for implementing inflation control). The panic here seems a bit premature to me.

Here’s the personal savings rate:

https://fred.stlouisfed.org/series/PSAVERT

And here’s the money velocity:

https://fred.stlouisfed.org/series/M2V

When the economy actually reopens and people start spending again, prices will go boom.

> When the economy actually reopens and people start spending again, prices will go boom.

Yes, this has actually been predicted. See also 2010-11:

> Then came a few months when inflation seemed to be rising after all. Consumer price inflation reached almost 4 percent; wholesale inflation went into double digits; the average price of commodities like oil and soybeans rose almost 40 percent in a year. Soon Republicans were haranguing Ben Bernanke, the Fed chairman, suggesting that his efforts might “debase the currency.”

> But the Fed stayed its course, arguing correctly that rising prices were a temporary blip, not a harbinger of ’70s-style stagflation. Inflation soon subsided, and it has stayed low ever since.

[…]

> So what’s going to happen in the months ahead? We’ll probably see a number of transitory price increases, not just because the economy is booming, but also because the lingering effects of the pandemic have produced some unusual disruptions — for example, a global shortage of shipping containers.

> The question will be whether these price increases are a 2010-2011-type blip or something more dangerous. Smart observers will look past the headlines to measures of underlying inflation — not just the Fed’s standard “core” measure but things like the Atlanta Fed’s sticky price index as well.

* https://www.nytimes.com/2021/03/22/opinion/us-inflation-stim...

* https://archive.is/Vxj5h

We heard the same thing about printing money during the QE years. Still waiting for inflation after ~10 years.

To clarify, the claim I object to is that inflation is currently, at the present moment, "running rampant." I agree that if the Fed does not handle things carefully then there may be problems in the future.