[mercutio2]

Our best guess at current instantaneous inflation (i.e., month over month, annualized) is just over 6% inflation. Which is above target, but is not severe. It’s 0.5% for the last month for which we have data, which (if it were precise and held constant, which it isn’t and won’t) annualizes to 6.17%.

Obviously the US is not accustomed to this rate, but there’s not a lot that breaks in the US economy with the rate where it currently stands. The money illusion makes people irritated, which has an impact on animal spirits, and Fed tightening has a more tangible effect on investment decisions.

Personally when my friends asked me “what does it mean that the US is doing all this deficit spending on pandemic subsidies?” circa 2020, I said, “it means rich people like me and my fellow software developers are likely to have our wealth diminished through inflation, but it will have positive distributive impact on the poorer folks in the economy”.

I think that’s been born out. It would be nice if we could dial inflation back instantaneously, but it does appear that we’re moving out of wage-price spiral territory, so I don’t think we have to fear years of stagflation or anything severe like that.