Why Are We So Afraid Of Inflation?

Why Are We So Afraid Of Inflation?

Share to Linkedin The inflation peaks of the 1970s were due to special factors, among which the quadrupling of gas ... [+] prices features prominently. In contrast, the monetary and fiscal concerns of today are exceedingly unlikely to trigger a similar crisis in price stability. Fears of runaway inflation are greatly exaggerated. Jerome Powell, the Fed chair, spooked the markets when he said that inflation could be going up. Never mind that he qualified this by saying that it would be due to a "base effect" - that is, prices would be higher this year compared to the very lower levels reached last year, when the economy shut down. Markets wobbled for a day or two as inflation warnings became louder, but dissipated when the CPI release showed a meager 1. 3% rise outside of food and gas. The Fed chief is not overly concerned, and neither should you. Inflation, of the kind that really matters, hasn't been around in decades. It has actually been coming down in the last few years in the aftermath of the financial debacle of 2008 and more recently the 2020 pandemic. The last inflationary period that caused serious economic trouble was the 1970s. The