Economic horror stories from the Great Depression and the 1970s can offer useful lessons, but they are no longer appropriate for today's world. In a world undergoing radical economic, technological, and climatic change, we must recognize that not all price increases are the same, and that some are desirable – and even necessary.
PRINCETON – In response to recent concerns about resurgent inflation, US policymakers deny that there is any threat and insist that expectations are “well anchored.” Any recent price spikes, they argue, will prove temporary, arising from one-off shortages that will be resolved when life returns to normal after the pandemic. Nonetheless, market participants and investors are increasingly obsessed with the issue, and pundits are rancorously divided, with some denouncing those with whom they disagree as “cockroaches.”
PRINCETON – In response to recent concerns about resurgent inflation, US policymakers deny that there is any threat and insist that expectations are “well anchored.” Any recent price spikes, they argue, will prove temporary, arising from one-off shortages that will be resolved when life returns to normal after the pandemic. Nonetheless, market participants and investors are increasingly obsessed with the issue, and pundits are rancorously divided, with some denouncing those with whom they disagree as “cockroaches.”