Tuesday, May 17, 2016

Outrageous Price Inflation Thinking

Scott Sumner writes:
 Market forecasts call for under 2% inflation over the next 5 to 10 years.  Those forecasts may be biased, but even Fed forecasts don’t show any overshooting.
Sumner doesn't quite endorse the view that price inflation will remain under 2% for the next 5 to 10 years, but he doesn't show any objection to such absurd forecasts. In fact, he notes that Fed forecasts support the view.

Given the current mad money printing of the Federal Reserve and indications that the desire to hold cash balances is shrinking, the likelihood is that price inflation will overshoot the 2% annualized price inflation rate within in months---not years.


1 comment:

  1. It would be interesting to probe Sumner on what metrics he thinks are "valid" in predicting future inflation....