Comments on: Inflation Defies Fundamentals http://www.arnoldkling.com/blog/inflation-defies-fundamentals/ taking the most charitable view of those who disagree Mon, 21 Dec 2020 00:12:22 +0000 hourly 1 https://wordpress.org/?v=4.0.32 By: Lord http://www.arnoldkling.com/blog/inflation-defies-fundamentals/#comment-454473 Thu, 06 Nov 2014 19:07:28 +0000 http://www.arnoldkling.com/blog/?p=4225#comment-454473 Or as central banks have inflation fighting credibility, producers won’t expect they will be able to raise prices or offer much more for wages, so low unemployment won’t readily lead to inflation, and only if they allow very low unemployment for a considerable time without reacting will that begin to change. Frozen in low inflation, much heat must be applied for thawing for the temperature to rise at all and once it does it will be as subject to refreezing as warming. About the only way sovereigns lose access to funding is to default and even that is temporary and they always have the option to restore fiscal order as long as borrowing in their own currency, so inflation is a choice. It is hard enough believing a bank that has operated at 0 for more than a decade will allow 2 even as they say, they would have to become entirely subservient to fiscal authorities to allow more. That requires a revolution in governance.

]]> By: Curt http://www.arnoldkling.com/blog/inflation-defies-fundamentals/#comment-454472 Thu, 06 Nov 2014 19:05:10 +0000 http://www.arnoldkling.com/blog/?p=4225#comment-454472 Agree with your final conclusion – my suspicion as you indicate is that the money/price belief system is indeed very sticky, until it’s not, and then big changes can occur fast. But what kinds of things lead to such tipping points is very unclear.

I liked John Kay’s line: “prices are the product of a clash between competing narratives about the world” (http://ineteconomics.org/blog/inet/john-kay-map-not-territory-essay-state-economics) – so what makes one narrative finally dominant?

]]> By: Lord http://www.arnoldkling.com/blog/inflation-defies-fundamentals/#comment-454470 Thu, 06 Nov 2014 18:27:24 +0000 http://www.arnoldkling.com/blog/?p=4225#comment-454470 If by emergent you mean people and the central bank are double ( and triple and quadruple) guessing each other as to what each will do under any circumstance and reacting accordingly, then yes, jointly co-determined.

]]> By: Hunter http://www.arnoldkling.com/blog/inflation-defies-fundamentals/#comment-454466 Thu, 06 Nov 2014 16:43:06 +0000 http://www.arnoldkling.com/blog/?p=4225#comment-454466 I prefer tautology. Inflation is when money is a liability. Deflation is when money is an asset. Zero is when money is a store of value. The circumstances under which any of these states occur will vary.

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