Transitory Inflation? Move Along. Nothing to See Here.

Source: Independent Institute
by Randall G Holcombe

“Many Beacon readers will be aware that the current rate of inflation, measured by the government’s Consumer Price Index, is 6.2%, measured from October 2020 to October 2021. Jerome Powell, Chair of the Federal Reserve Bank’s Board of Governors, says this inflation is transitory. Yet he also says we could be seeing high inflation rates into next summer. Federal Reserve officials either are deliberately downplaying the current inflationary environment, or have a poor understanding of the forces behind it. … If there is anything transitory about our current inflation, it is that 2020 was the anomalous year, in which inflation was artificially lower because of the reduced demand due to the COVID pandemic and policies. When businesses are shut down and people are put out of work, they become more cautious in their spending. That postponed the effects of the Federal Reserve’s inflationary policies, which are now coming back.” (11/12/21)