It Would Help If Today’s ‘Inflation’ Hawks Understood What Inflation Is

It Would Help If Today’s ‘Inflation’ Hawks Understood What Inflation Is

Share to Linkedin "The real shock was that the dollar was depreciating against oil, gold, against foreign currencies and against nearly everything else." – Robert L. Bartley, The Seven Fat Years, p. 32 The late Robert Bartley wrote the passage that begins this piece in his classic 1992 book, The Seven Fat Years. Bartley was writing about the early 1970s. To this day, economists, pundits and politicians confuse the so-called "oil shocks" in the 1970s with the Arab oil embargo from 1973. Supposedly the latter resulted in "shortages," and inflation. No, to blame inflation on rising prices is like fingering wet sidewalks as the cause of rain. At best causation is being reversed. The main thing is that Bartley, along with a few others uniquely understood that there were no "oil shocks" to speak of in the 1970s. As economic logic dictates, embargoes are toothless given the simple truth that there's no accounting for the final destination of any good. The oil that Arab countries ceased selling into U. S. markets still reached U. S. markets; the only difference being that Americans bought "Arab oil" from those the Arabs sold it to. As the value of the dollar declined in