Inflation lasts a long time. A loooooooong time

[Mick]

Investors may be in for this rude surprise: History shows inflation can take years to return to normal even when Fed hikes above 10% – MarketWatch

It’s going to be years before we get back to normal, apparently.  Doesn’t surprise me much.

[Neodymium60]

Yes. Likely to go on for years.   The great inflation of the 70s began in 1972 and by 1980 it was 14%.  Interest rates went to 20%.

I saw Volcker speak at the 1983 Dartmouth commencement.  His words.

“The chairman of the Federal Reserve Board, Paul A. Volcker, today defended the Federal Reserve’s ”pragmatic” approach to economic problems, and urged Dartmouth College’s class of 1983 to ”retain a health skepticism about single dramatic answers.”

”Some indulge in the hope or the conviction that monetary policy, if only conducted just right, alone could somehow make it all come out appropriately,” Mr. Volcker said.

”In the end, the creation of more money, or less, isn’t going to solve the budgetary problem,” he added. ”That requires hard action to reduce expenditures or increase revenues in real terms.”

Milton Friedman said that “inflation is always a monetary problem”.

By that time Reagan was well into his first term and Congress passed the first of two huge tax reform packages.   The first 1983 and second in 1885.  By 1985 the economy was flying.

• This reply was modified 3 years, 10 months ago by Neodymium60.

[rogpodge]

My favorite new talking point is that there is inflation everywhere, so it’s clearly not Joe Biden’s / the Democrats’ fault.  1) We live in a global economy, and 2) inflation spreads along trade routes, particularly when you’re running up record trade deficits.  It’s not like this is a new concept.

https://msh.councilforeconed.org/lessons.php?lid=68371

Back in the 14th century, Mansa Musa of Mali went on the Hajj, and brought so much gold (and gave it away) that he caused hyperinflation in Cairo, Medina, and Mecca for approximately a decade.  Granted record-keeping back in those days wasn’t great, but all three cities reported that the price of gold dropped by a lot for almost a decade.  Given how important trade was back then, it’s unlikely that it had no effect.

[rjnwmill]

Michael (The Big Short) Burrey is of the opinion that inflation is yesterday’s news?

Legend Michael Burry Warns of ‘Disinflation’ and Soaring Growth Stocks

Here's a toast with one last pour, may it last forever and a minute more;
Good fortune seems to you have sung, to live and love way past long

[Author]

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