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Of course it goes down. Take a look at this chart, expand to 10y or max; inflation was about -0.75% in early 2020. In fact, it went into negative territory many

Of course it goes down. Take a look at this chart, expand to 10y or max; inflation was about -0.75% in early 2020. In fact, it went into negative territory many times in the last decade. Prices go down during recessions, particularly. https://tradingeconomics.com/united-states/inflation-rate-mom https://tradingeconomics.com/united-states/inflation-rate-mo... OTOH, the Fed has goal of maintaining a 2% inflation target; so in the long run you can expect it to go up. For many many years before the pandemic, it failed to achieve that goal. Inflation was too low; which means job growth, wage growth, and gdp was below potential.

honkkong420 4y ago
But our unemployment rates were so low in 2019, how could they have been lower with higher inflation?
- celtain 4y ago
  We have seen unemployment fall slightly below 2019 levels, but the more significant result of greater demand stimulation would have been reaching those levels of unemployment much faster, rather than taking a decade to recover from the great recession.
  - honkkong420 4y ago
    That seems to be entirely explained by labor force participation. Note the skyrocketing amounts of people with more than one job
- jonnycomputer 4y ago
  high employment and higher inflation can go hand in hand, actually, just high unemployment and deflation can (in a recession).
  - honkkong420 4y ago
    Yeah that’s my point, inflation rates don’t really influence unemployment rates except at the margin
RC_ITR 4y ago
Prices are an index and very rarely is the index not at an ath. Even in The periods you mentioned, the index was only off ath for a month or 3 and that’s mostly noise from Energy prices, so no it never reached a new equilibrium below where it was (that would be disastrous) https://fred.stlouisfed.org/graph/fredgraph.png?g=SF8B https://fred.stlouisfed.org/graph/fredgraph.png?g=SF8B

honkkong420 4y ago

But our unemployment rates were so low in 2019, how could they have been lower with higher inflation?

celtain 4y ago
We have seen unemployment fall slightly below 2019 levels, but the more significant result of greater demand stimulation would have been reaching those levels of unemployment much faster, rather than taking a decade to recover from the great recession.
- honkkong420 4y ago
  That seems to be entirely explained by labor force participation. Note the skyrocketing amounts of people with more than one job
jonnycomputer 4y ago
high employment and higher inflation can go hand in hand, actually, just high unemployment and deflation can (in a recession).
- honkkong420 4y ago
  Yeah that’s my point, inflation rates don’t really influence unemployment rates except at the margin

RC_ITR 4y ago

Prices are an index and very rarely is the index not at an ath. Even in The periods you mentioned, the index was only off ath for a month or 3 and that’s mostly noise from Energy prices, so no it never reached a new equilibrium below where it was (that would be disastrous) https://fred.stlouisfed.org/graph/fredgraph.png?g=SF8B https://fred.stlouisfed.org/graph/fredgraph.png?g=SF8B