The inflation permahawks

By Felix Salmon
September 8, 2009
Jim Surowiecki has a good column on inflation this week:

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Jim Surowiecki has a good column on inflation this week:

Why are people afraid that inflation is about to get out of control? Because they’re always afraid that inflation is about to get out of control.

He’s right: it’s hard to find someone who’s worried about inflation right now who isn’t always worried about inflation. If you stay worried about inflation for decades, of course, eventually you’ll be able to claim justification. But I’d take you much more seriously on the subject of inflation today if you hadn’t told me all the way through the Fed rate cuts of 2007 and 2008 that each one was about to unleash monster inflation and was a Really Bad Idea. If we’d been listening to the likes of Barry Ritholtz, we’d still have Fed funds at 5% today.

Comments
8 comments so far

then there are those who will always hawk a need for more cuts/ lower rates.

Posted by dvictr | Report as abusive

Those inflation permahawks…they’re just like the those nutty permabears who kept warning us about the stock market.

Posted by maynardGkeynes | Report as abusive

Should we discount you then because you were too optimistic all throughout 2007 and 2008?

The perma bears will always be with us and so will those who are always worried about inflation. But methinks that the present time is the wrong time dismiss those fears.

Beyond the snark, I should add that if you could not have inflation with high unemployment we would have never had the 70′s. So I am not overly impressed with Jim Surowiecki reasoning.

At present, I am in the deflation camp — but your are missing the bigger issue:

The reason is the Free lunch belief that so many central bankers, government officials, fund managers, and other folks seem to have.

Greenspan: We can cut rates to 1% and leave them there for a long time, with no impact on Inflation! (How’d that work out?)

Bernanke: We can cut rates to 0%, and print lots of money, with no impact on Inflation! (We will soon find how this will work out).

Gee, why might anyone be concerned about inflation . . . ?

Arrogance and simplicity are a dangerous mix – on far too many topics you have abundant amounts of both. Not sure what your career (ya right, you look like you’re 20) was before commenting on other peoples comments for a living, but it probably wasn’t very successful if it was in finance…

Posted by 16.8% unemployed, what problem? | Report as abusive

I read BR’s blog regularly and I wouldn’t call him an ‘inflation hawk’ and certainly wouldn’t lump him in with all the ‘goldbugs’.

While I think that the obsession with ‘Fed printing’ and fears of Weimar-style hyperinflation are grossly overblown (and the proponents forget about the all-important velocity of money, not just its existence and have almost superstitious beliefs about gold) it does appear that absurdly low interest rates that we’ve seen off and on this past decade have fueled one bubble after another, primarily to avoid any real (and much needed!) reform of the entire financial system.

Right now, once could argue that AGAIN there is a bubble in equities and commodities, an ongoing attempt to re-inflate real estate and unfortunately it seems to be at the expense of the actual economy where people have jobs and make things.

Starting with the belief that monetary policy alone can ‘fix’ anything.

Posted by Jessica6 | Report as abusive

“If you stay worried about inflation for decades, of course, eventually you’ll be able to claim justification.”

And why exactly is that a true statement? It’s true because there would be, essentially, undetectible inflation if the gub’mint were not debasing our currency for the last 30+ years.

For the first 150+ years of our nation, there was NO inflation, because the government budgeted within its means, something none of us have ever witnessed.

Posted by tim | Report as abusive
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