In the inflation debate, we have people on one end arguing it's going to be transitory, and another group saying we risk seeing rampant inflation. Is either side winning yet?Well, no. I'm on the transitory side, although not with high certainty. There's the cliche about uncharted territory and all that, but it really is. Nothing like this has ever happened in the record.
I'm going to be looking at things like a couple of the Atlanta Fed indices. I'm going to be looking at sticky-price inflation. I'm going to be looking at trimmed-mean inflation, which would purge the bottleneck effects. The old judgment was that 2% inflation was enough to ensure that you would never hit the zero lower bound. Nobody can believe that now. But I don't know if they're ready to go there, and it's not clear that there's any contemplation of an inflation target high enough that we can consider ourselves immune to the kinds of crises we've had.This is the question that is on everyone's mind, but I'd be remiss if I didn't ask.
It seems likely that we'll have an economy that is overheated but in a very mild sense. Not in a scary sense, but nonetheless overheated by early next year. But we'll also be looking at a looming fiscal contraction because the American Rescue Plan will have done its thing already. We're getting this big slug of money, a lot of which is still going out. Special props to Biden for ending the tyranny of cute acronyms. Instead of PATRIOT Acts and CARES acts, we now have"American" everything. The first American, well, most of that money has already gone out, and the economic effects will take some time to play out.
I'm mixing metaphors here. We've got a lot of savings all dressed up with nowhere to go. That's basically the secular stagnation problem. It's not clear that we really are getting at the issue of untaxed gains from wealth. The attempts to tighten up taxation of capital gains look a little weak. I haven't seen people make this point: In the overheating debate, MMTers, at least if they're consistent with their own doctrine, are substantially to the right of people like me. Because I say,"Look, if the stimulus that comes out of the rescue plan is too big, that's okay. The Fed can tighten monetary policy and prevent an inflationary problem."
Clueless, or nefarious?
“the odds are that by this time next year, jobs will be plentiful, things will be looking pretty good. Inflation might be a bit higher, but your income will be more than keeping up with it.” RemindMe_OfThis in 1 year
“government underspending” Spending over $6 trillion in less than a year is underspending? Got it. paulkrugman is a hack. He’s no economist.
Such a bs
When did the under-spending start?
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