3 ms·

In this case you have: * The Fed who wants 2% inflation rate * 12 months of inflation that were very low, dipping to 0.1%. [1] * Re-opening of much of the ec

In this case you have: * The Fed who wants 2% inflation rate * 12 months of inflation that were very low, dipping to 0.1%. [1] * Re-opening of much of the economy * Massive consumer spending * Lots of issues with manufacturing & shipping over the past few months * Drought effecting crop prices [2] I don't think that counts as a coin flip. 1 - https://www.usinflationcalculator.com/inflation/current-inflation-rates/ https://www.usinflationcalculator.com/inflation/current-infl... 2 - https://www.drought.gov/current-conditions https://www.drought.gov/current-conditions

nostromo 5y ago
Don't forget the counter argument: * The largest annual increase of the money supply in the history of the US, far larger than even WWII, with no end in sight.
- lottin 5y ago
  Yeah but the money supply is an instrument of the Fed to control inflation. The fact that it has gone up indicates the Fed is attempting to increase the inflation rate, which makes sense because the rate is below the 2% target. So, I'm not sure what this argument is trying to tell us...
- throw0101a 5y ago
  With a corresponding drop of velocity (V) off a cliff: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V * https://en.wikipedia.org/wiki/Money_supply#Link_with_inflation https://en.wikipedia.org/wiki/Money_supply#Link_with_inflati... Milton Friedman and Monetarists were wrong: velocity is not constant, and it does affect inflation. > Indeed, from 1982 to 1985, Friedman repeat- edly predicted a major revival of inflation that never occurred. In 1982 he predicted 8 percent inflation for 1983; the outcome was around 4 percent (FORT, 03/19/84). In July 1983, Friedman wrote, “We shall be fortunate indeed if we escape either a return to double-digit inflation or renewed recession in 1984” (NW, 07/25/83). In August 1983, he said, “U.S. inflation rates will rise appreciably in 1984, although it’s not yet determined where they’ll go from there” (TSN, 08/30/83). In April 1984, Friedman said, “I believe [the CPI] will be rising in the neighborhood of 8 to 10 percent in 1985.”33 Even in November 1985, Friedman said that “Inflation is not dead. It will emerge once again and will be higher next year than it is this year. We almost surely are currently at the bottom of this inflationary episode and are likely to be starting up again” (NYDN, 11/13/85). Defying these predictions, inflation was consistently below 5 percent in every month from 1983 to 1986; moreover, apart from a brief uptick in early 1984, inflation continued to decline after 1982, and was lower in 1986 than it was in 1985. * PDF: https://files.stlouisfed.org/files/htdocs/publications/review/07/05/MayJun07Review.pdf https://files.stlouisfed.org/files/htdocs/publications/revie...

nostromo 5y ago

Don't forget the counter argument: * The largest annual increase of the money supply in the history of the US, far larger than even WWII, with no end in sight.

lottin 5y ago
Yeah but the money supply is an instrument of the Fed to control inflation. The fact that it has gone up indicates the Fed is attempting to increase the inflation rate, which makes sense because the rate is below the 2% target. So, I'm not sure what this argument is trying to tell us...
throw0101a 5y ago
With a corresponding drop of velocity (V) off a cliff: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V * https://en.wikipedia.org/wiki/Money_supply#Link_with_inflation https://en.wikipedia.org/wiki/Money_supply#Link_with_inflati... Milton Friedman and Monetarists were wrong: velocity is not constant, and it does affect inflation. > Indeed, from 1982 to 1985, Friedman repeat- edly predicted a major revival of inflation that never occurred. In 1982 he predicted 8 percent inflation for 1983; the outcome was around 4 percent (FORT, 03/19/84). In July 1983, Friedman wrote, “We shall be fortunate indeed if we escape either a return to double-digit inflation or renewed recession in 1984” (NW, 07/25/83). In August 1983, he said, “U.S. inflation rates will rise appreciably in 1984, although it’s not yet determined where they’ll go from there” (TSN, 08/30/83). In April 1984, Friedman said, “I believe [the CPI] will be rising in the neighborhood of 8 to 10 percent in 1985.”33 Even in November 1985, Friedman said that “Inflation is not dead. It will emerge once again and will be higher next year than it is this year. We almost surely are currently at the bottom of this inflationary episode and are likely to be starting up again” (NYDN, 11/13/85). Defying these predictions, inflation was consistently below 5 percent in every month from 1983 to 1986; moreover, apart from a brief uptick in early 1984, inflation continued to decline after 1982, and was lower in 1986 than it was in 1985. * PDF: https://files.stlouisfed.org/files/htdocs/publications/review/07/05/MayJun07Review.pdf https://files.stlouisfed.org/files/htdocs/publications/revie...