Sunday, April 21, 2019

Is Price Inflation Dead?

This is the latest cover of Bloomberg Magazine.


I consider the idea that price inflation is dead way off base.

As I have noted in the EPJ Daily Alert, price inflation bottomed in late 2015 and has been generally climbing ever since.


And I wrote this in a recent ALERT:
An Important History of Price Inflation Spikes 
We have been in a period of relatively mild movement in price inflation but don't think this will always be the case. Sometimes price inflation can spike quite rapidly. 
From the chart above:
in January 1950 price inflation was a negative -2.1% just over a year later in April 1951 price inflation was 9.6%.
In August 1972 price inflation was 2.9%, a year later in August 1972 it was 7.4%.
In January 1987 price inflation was 1.4% by the end of the year in December it was 4.5%
In July 2009 price inflation was -2.0%, six months later in December 2009 it jumped to 2.8%.
Most inflation observers including most Fed members have been hypnotized by the recent mild price inflation. None of them have in their forecasts that price inflation will climb rapidly from here---but it could. There is plenty of new money in the system which could mean a jump to 3.0% could happen at any time and then a follow-up jump to 5.0% is not out of the question. If anything I might be too conservative about my inflation warnings.
Don't be hypnotized like the masses that strong price inflation is dead forever.
Just because price inflation has been relatively mild in recent years, doesn't mean it will continue to be so. In fact, I make the case in the ALERT that there are many indications that it will heat up in the near future.


Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.com and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank and most recently Foundations of Private Property Society Theory: Anarchism for the Civilized Person Follow him on twitter:@wenzeleconomics and on LinkedIn. His youtube series is here: Robert Wenzel Talks Economics. More about Wenzel here.

2 comments:

  1. Inflation is never discussed. I'm certainly worse off than 20 years ago. My current salary is less than it was 20 years ago on an inflation adjusted basis.

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    Replies
    1. Exactly while Stealth Inflation flourishes all around us in key areas such as healthcare, housing, diminishing food package sizing.

      it has convinced me the dumbing down of Murica is a raging success.

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