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I think this sort of comment isn't very helpful. This isn't a theoretical discussion: when people discuss this issue they're asking what we should do about the
by matthewdgreen 5y ago
I think this sort of comment isn't very helpful. This isn't a theoretical discussion: when people discuss this issue they're asking what we should do about the specific demand/supply issues. The answer to that question depends on the details.
To use a ridiculous example, let's say the problem was a surge in the price of Christmas trees. One solution to the problem is to change central bank policy; a second solution is to do nothing and wait until December 26th. Clearly the price increase is caused by demand/supply issues, but it's possible to think more deeply about what's causing the demand and supply and come up with different prescriptions for how to deal with it.
- rory 5y agoConversely, I think it's unhelpful to excuse away inflation as supply/demand issue and explain that if you just exclude all the things people buy, inflation really isn't that bad. Inflation in the 70's was also caused by supply/demand issues and problems with supply chains (that's what an oil shock is). Obviously the specifics determine the appropriate response, but they don't invalidate the headline number. That's the same logic the inflation panic folks used to pretend there was high inflation when there wasn't.
- matthewdgreen 5y agoIf all you want to do is point at the headline number and go no farther, that’s fine. But it seems fairly pointless unless the goal is just to kvetch about something that’s generally unfortunate. In this thread nobody is denying the headline number, they’re just pointing out that a lot of these effects may cease to exist in the future even if we do nothing else. Hence maybe it’s not something to panic about.