3 ms·

My prediction: Overall price inflation in the USA will remain low.

• russell 16y ago
  I am curious to know your reasoning. In a post in this thread I was leaning towards inflation in a few years, with the other possibility being a long recession or Japanese style stagflation. The downside would come from an austerity program hitting the middle class.
  • aristidb 16y ago
    Because deleveraging of the banking system produces a deflationary shock. The Fed is trying to offset this, but for political reasons can only partially (people would cry "currency debasement!" - and already do). Scott Sumner has written some things on this: http://www.themoneyillusion.com/ http://www.themoneyillusion.com/ The fact that interest rates are very low is also a hint that maybe inflation expectations are not very high. A good source for the relevant interest rates: http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/ http://www.bloomberg.com/markets/rates-bonds/government-bond... (yield column). You can also compare to Japan there.
  • Symmetry 16y ago
    Japan style stagflation? Japan has been suffering deflation during its recent period of stagnation. Indeed, the Japan central bank has long worked hard to insure that inflation in Japan remains roughly 0%, and they have on average succeeded at this, with some years the yen increasing in value and some years decreasing - but generally these changes cancelling out. Indeed, many people like Milton Friedman have blamed the bank's insistance on 0 inflation for playing a role in Japans economic problems.