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Recently the Fed hasn't been good at getting inflation to 2% (their published target) and economists haven't been good at predicting whether the Fed will succee
by jedharris 6y ago
Recently the Fed hasn't been good at getting inflation to 2% (their published target) and economists haven't been good at predicting whether the Fed will succeed, or modeling why the Fed has failed.
Noah (article) doesn't emphasize this but he does refer to it. We don't really understand ordinary inflation much less hyper-inflation. Even the cause of the famous period of inflation in the 1970s is still very much debated.
- notahacker 6y agoThe Fed faces exactly the opposite challenge to hyperinflation though (and there's no shortage of literature about zero lower bounds and liquidity traps, and no real surprise economies find themselves [back] in one) But my point isn't that we know everything about inflation, it's that we know some spending is more likely to trigger it than others and so asking 'how much' the government can borrow before triggering hyperinflation is asking the wrong question, not least because expectations are known to have a large impact on inflation and so Goodhart's Law applies. And whether the current macroeconomic policy emphasis on stabilising inflation is excessive[1] or not, we definitely do know ways to get inflation down [1]a more usual line of criticism than arguing economists don't study inflation enough!