If everyone interprets recent price spikes as temporary shocks that will disappear as the economy reopens and production ramps up, then inflation and overheating concerns should fade. But if people start to freak out about inflation, then inflation becomes a self-fulfilling prophecy. Businesses start preemptively raising prices and wages, because they expect everyone else to do so, too.
So if there's inflation, it will be our fault. Calm down, settle back. It's only going to be a problem if you make it a problem.
ADDED: It's all in the mind, so....
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4 comments:
bb writes: "Time to start wearing the WIN pins again."
Craig writes: "I remember reading an article around 1971 that expressed concern for the financial future of the Baby Boomers. We wouldn’t likely be able to provide for our retirements because our parents’ generation owned all the stocks."
Mike of Snoqualmie writes:
"Inflation is a monetary problem. All of the Covid relief efforts have pumped about $4T into the economy in little more than a year. Democrats are promising another $4T in spending. Injecting $8T into the economy without a corresponding increase in production can only result in massive inflation. In fact, Joe “Jimmy Carter 2.0” Biden’s policies are discouraging production, with shutdowns in oil drilling and oil pipelines, overgenerous unemployment payments that discourage workers from working. He thinks there’s no limit to what the Federal government can buy without affecting the private sectors. There are only so many carpenters, plumbers and electricians as well as lumber, PEX piping and copper wire. Trying to use more than is available only jacks up their prices. That’s economics 101 – Supply and Demand. But, Democrats don’t believe in Econ 101, they just use all of their magic wands to get what they want."
R.T. O'Dactyl says:
Wile E. Coyote can walk off a cliff and stand unsupported in mid-air, as long as he doesn't look down.
Don't try this at home.
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