Meyrick, first off, really interesting analysis, thank you. Second, it's funny how the econometric indicators have been pointing to reduced inflation lately, and yet inflation remains the number one concern of the populous. It has become clear to me that the term inflation has many meanings, as per the Misesian view of increased money supply, the current policymaker view of the rate go change of some measured price series, and the view of the vast majority of humans on this planet, the price level. It seems to me that whatever occurs in the data series, until such a time as home prices revert to a more historic level compared to wages, or until food prices start to actually decline in the grocery store, the concept of high inflation is going to be with us for a while. given the speed with which prices rose in 2021-2022, everybody still remembers what they used to be and so everybody is still thinking that prices are high, whatever the macroeconomists would have you believe.
Yes, you are right the population views price stability as level stability, not rate of change stability. From a policy maker perspective, however, a return to previous price level would entail a highly disruptive bout of deflation, undoubtedly accompanied by very significant
unemployment. It is just not a viable policy option. Unfortunately, Fed policy may be an unwitting agent of real wealth inequality. Capital market values are bolstered by continuing 'ample reserves' at the same time labour is squeezed by real erosion of income and higher mortgage rates, meaning inflation has a two-tier effect on the lower paid.
oh, I don't think it is going to happen, nor do I expect it's what the Fed has in mind. my point is simply that the term is bandied about without regard to its meaning in different segments of the population. and yes, the Fed was clearly a key driver of wealth (and income) inequality, the biggest driver in my mind. after all, that's what Bernanke told us when he started
Alienation of the population from 'mainstream' institutions is underpinned by dissonance in communication. If the Fed achieves 2% inflation it is viewed internally as a cause for celebration, but for large parts of the population there is no victory and to be portrayed thus (which it is) is viewed as sleight of hand. Not coincidentally, inflation has been an important revolutionary force throughout history. And unfortunately, popular disillusion with rhetoric/policy is not limited to mutual incomprehension on inflation.
Meyrick, first off, really interesting analysis, thank you. Second, it's funny how the econometric indicators have been pointing to reduced inflation lately, and yet inflation remains the number one concern of the populous. It has become clear to me that the term inflation has many meanings, as per the Misesian view of increased money supply, the current policymaker view of the rate go change of some measured price series, and the view of the vast majority of humans on this planet, the price level. It seems to me that whatever occurs in the data series, until such a time as home prices revert to a more historic level compared to wages, or until food prices start to actually decline in the grocery store, the concept of high inflation is going to be with us for a while. given the speed with which prices rose in 2021-2022, everybody still remembers what they used to be and so everybody is still thinking that prices are high, whatever the macroeconomists would have you believe.
Yes, you are right the population views price stability as level stability, not rate of change stability. From a policy maker perspective, however, a return to previous price level would entail a highly disruptive bout of deflation, undoubtedly accompanied by very significant
unemployment. It is just not a viable policy option. Unfortunately, Fed policy may be an unwitting agent of real wealth inequality. Capital market values are bolstered by continuing 'ample reserves' at the same time labour is squeezed by real erosion of income and higher mortgage rates, meaning inflation has a two-tier effect on the lower paid.
oh, I don't think it is going to happen, nor do I expect it's what the Fed has in mind. my point is simply that the term is bandied about without regard to its meaning in different segments of the population. and yes, the Fed was clearly a key driver of wealth (and income) inequality, the biggest driver in my mind. after all, that's what Bernanke told us when he started
Alienation of the population from 'mainstream' institutions is underpinned by dissonance in communication. If the Fed achieves 2% inflation it is viewed internally as a cause for celebration, but for large parts of the population there is no victory and to be portrayed thus (which it is) is viewed as sleight of hand. Not coincidentally, inflation has been an important revolutionary force throughout history. And unfortunately, popular disillusion with rhetoric/policy is not limited to mutual incomprehension on inflation.
hence the 4th turning. you are absolutely correct