Wednesday, February 16, 2011

Now, Airline Price Hikes

Serious price inflation is closer than Paul Krugman ever dreamed. From food to clothing and now airline tickets, price inflation at the consumer level is just around the corner. AP reports:
Major US airlines are raising the price of some tickets favored by business travelers again, this time by up to $120 per round trip.

Delta started the round of rate hikes Monday, and was ultimately followed by American, United, Continental and US Airways.
This is what Krugman wrote in November of last year, roughly 90 days ago:
There’s really nothing here to shake my view that deflation, not inflation, is the threat.
He also wrote this in November: don’t want to make too much of short-term wiggles; the big point is the downward sweep since the slump began. Disinflation is underway, with deflation a real eventual possibility.
Bottom line: Krugman's Keynesian framework, which is also used by Fed chairman Bernanke, is a useless that will do nothing but hang Krugman and Bernanke out for the clueless theorists they are. Not only did Bernanke miss the housing bubble/bust. He is missing the price inflation that is about to smack the country.

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