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Over the past three years inflation has gone from “transitory” to “persistent” to, well, boring. Across the developed world annual price increases are returning towards the subdued 2% level targeted by many central banks. Commentators are talking of the Goldilocks scenario, where the economy, like the porridge in the fairy tale, is neither too hot nor too cold.
Don’t break out the champagne yet, though. There’s a long history of monetary policymakers prematurely celebrating the end of inflation, only to be caught off guard by its sudden resurgence. Perhaps the best example comes from the early 1970s.
Mainstream media is preparing public opinion ;)
Inflation is never “temporary” once the money supply is increased, it is increased. The only way to deflate the money supply is to take some of that evergreen currency out of the economy. The Fed is deathly afraid of that because they and their owning banks would suffer losses due to bankruptcies. Perhaps they are making a subtle warning to batten down the hatches for the storm ahead.
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