The New York Times has published a strange article by Justin Wolfers, an economist at the University of Michigan. The headline is that his economist brain makes him say with regard to inflation: “Don’t worry, be happy.” The article gives the reader as much reason to trust economists as you do epidemiologists, which is to say not at all.
The idea is that if both prices and income go up together, it all pans out in the wash. Yes, the article goes on for 1,000 words to say that but that’s its essence. The thought is that the 25 percent inflation we’ve experienced over the last 4 years really hasn’t done any damage. Money is neutral to economic exchange and so is inflation.
So just chill!
Inflation is a lot scarier when you fear that today’s price rises will permanently undermine your ability to make ends meet. Perhaps this explains why the recent moderate burst of inflation has created seemingly more anxiety than previous inflationary episodes…we’re in the midst of a macroeconomic anxiety attack.
Now, on the face of it, this claim is notable because he nowhere claims that inflation does actual good, so perhaps that is a step in the right direction. If that’s true, what’s the point of printing up $5 trillion-plus in 2020 and following? No question that this is the direct cause of the loss in purchasing power of the dollar that we’ve experienced. If money is entirely neutral and inflation essentially irrelevant, the Fed should simply freeze the money stock if only to reduce anxiety.
www.infowars.com/posts/is-inflation-harmless/