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My guess is that those who run large financial institutions came of age when inflation was much higher and a difficult beast to tame. Therefore they see the inf

My guess is that those who run large financial institutions came of age when inflation was much higher and a difficult beast to tame. Therefore they see the inflation boogeyman around every corner even though it hasn’t been like that in a long time. (That’s not to say high inflation won’t come at some point, but so far the doom and gloom merchants have been wrong for decades). You see this inflation mania most clearly with the ECB, which essentially is controlled by Germans. They fear a Weimar Republic-style hyperinflation above all else. So some of the policies coming out of the 2008 crisis reflected this, instead of being flexible enough to cope with the actual conditions and challenges of the day.

NoOneNew 5y ago
Yea, but let's metaphor the boogey man issue to driving a car. When you drive, you're often avoiding collisions. Mostly passively. If you drive faster than the car in front of you, you will crash. If you dont brake at a red light, you will crash. Most people dont crash most of the time because they respect the threat. You cant just go, "you know, I haven't crashed in 5 years. I dont have to brake at this red light." Sure, inflation issues aren't that prevalent in the past few decades. Doesn't mean you stop assuming it's not a possibility. You do things to avoid it. The longer you do that, the longer you avoid problems. You cant stop your precautions just because it's been a while, then whine why the problem reemerged.
- patrickk 5y ago
  I never said it’s no longer a possibility. Just that for every news event that happens, there is an immediate chorus of “inflation!!!!” no matter the circumstances. Some economists argue that there is indeed considerable inflation right now- except it’s in financial assets owned mostly by the wealthy, like the stock market trading at high P/Es, housing (inflated in multiple countries, not just the US due to easy credit). There was also a headline recently that VC investing is record high at the moment. So there’s inflation, just not in consumer staples.
nostromo 5y ago
The reason it is so feared is because it's next to impossible to contain once it starts without causing massive economic hardship. In fact, the Fed could likely do next to nothing about inflation with our country's current debt levels. Even at a historically average rate of 8%, our federal government would either go bankrupt, cut most spending, or massively raise taxes, causing a severe economic retraction. (Our $26T in debt would require half of the entire federal budget to service our debt at such rates.) Many of our largest corporations would also fold, unable to service their massive debts. It'd be a disaster. That's why people fear runaway inflation, even if it hasn't been a problem for several decades. Once you can identify it as a problem, it's too late.
- csomar 5y ago
  Isn't it why Japan, Europe and now the USA have 0/negative rates? The government literally makes money to borrow money. They can't default with negative or zero rates. They are basically being bailed out by the "economy". It's sensible to be afraid of hyper-inflation. At some point the economic actors are going to be fed up with it and off-load their investments.
- omginternets 5y ago
  >The reason it is so feared is because it's next to impossible to contain once it starts without causing massive economic hardship. What's the process for containing inflation, and what's its mechanism of action?

NoOneNew 5y ago

Yea, but let's metaphor the boogey man issue to driving a car. When you drive, you're often avoiding collisions. Mostly passively. If you drive faster than the car in front of you, you will crash. If you dont brake at a red light, you will crash. Most people dont crash most of the time because they respect the threat. You cant just go, "you know, I haven't crashed in 5 years. I dont have to brake at this red light." Sure, inflation issues aren't that prevalent in the past few decades. Doesn't mean you stop assuming it's not a possibility. You do things to avoid it. The longer you do that, the longer you avoid problems. You cant stop your precautions just because it's been a while, then whine why the problem reemerged.

patrickk 5y ago
I never said it’s no longer a possibility. Just that for every news event that happens, there is an immediate chorus of “inflation!!!!” no matter the circumstances. Some economists argue that there is indeed considerable inflation right now- except it’s in financial assets owned mostly by the wealthy, like the stock market trading at high P/Es, housing (inflated in multiple countries, not just the US due to easy credit). There was also a headline recently that VC investing is record high at the moment. So there’s inflation, just not in consumer staples.

nostromo 5y ago

The reason it is so feared is because it's next to impossible to contain once it starts without causing massive economic hardship. In fact, the Fed could likely do next to nothing about inflation with our country's current debt levels. Even at a historically average rate of 8%, our federal government would either go bankrupt, cut most spending, or massively raise taxes, causing a severe economic retraction. (Our $26T in debt would require half of the entire federal budget to service our debt at such rates.) Many of our largest corporations would also fold, unable to service their massive debts. It'd be a disaster. That's why people fear runaway inflation, even if it hasn't been a problem for several decades. Once you can identify it as a problem, it's too late.

csomar 5y ago
Isn't it why Japan, Europe and now the USA have 0/negative rates? The government literally makes money to borrow money. They can't default with negative or zero rates. They are basically being bailed out by the "economy". It's sensible to be afraid of hyper-inflation. At some point the economic actors are going to be fed up with it and off-load their investments.
omginternets 5y ago
>The reason it is so feared is because it's next to impossible to contain once it starts without causing massive economic hardship. What's the process for containing inflation, and what's its mechanism of action?