Inflation hawks and doves are at it again. The hawks warn we've done too much and risk inflation. The doves counter that doing too little will scar people.
I totally agree with your analysis that we are unlikely to see significant demand pull inflation. I am more worried we might see cost push from our over-monopolized, incredibly fragile, just-in-time supply chain collapsing in key sectors. Which I fully expect everyone to blame on too much spending anyways (just like in the 70's) dooming us to austerity and high unemployment until we elect a competent fascist.
Cost-push inflation--that is, when production costs not rising demand--set off a upward spiral in prices is a risk too. Even so, I find that risk unlikely due to robust trade channels. Of course, we are living through a shipping disruption but it's not a permanent one. Stoller has a point about monopolies but it's overblown some. And breaking up monopolies would almost certainly put some upward pressure on prices. It may still make sense for other reason to reduce monopoly power, but every policy, including current ones, has trade offs. Finally, in no way shape or form to I want a fascist running the United States.
Re monopolies, that first link is the abridged argument. There is also the slightly more wonkish but significantly longer (just shy of 400 pages) argument that starts off with a history of antitrust and then goes into how the current clueless dominant paradigm that practically encourages monopolies took hold, followed by several chapters of specific examples. I highly recommend it if you can find the time.
And yes, we have robust trade channels in the sense that trade in general is very easy, even with a ship stuck in a canal. What we don't have hardly any of is resilience. How many car manufacturers had to stop production because of the semiconductor shortage?
It's like that everywhere, in every sector. If something happened in India we would be out of 90% of our prescription meds within a few months. It's nuts.
The macro men gatekeepers seems like the only necessary sentence to me! Theoretical macro has always been a joke. I can invent laughable assumptions and fantastical systems of equations too. But I'm a statistician with integrity, not an on the spectrum Randian asshole trying to take the relevant n of <= 3 and mathify my oligarchic and mean spirited ideology to confuse the plebes into letting me and my rich friends take literally everything in rents and leave zero for wage growth for generations for those who've been allowed in the economy for a while (white men). It proves the point that the "progressive" option is Summers (as opposed to, say, the personable but straight evil Mankiw).
I totally agree with your analysis that we are unlikely to see significant demand pull inflation. I am more worried we might see cost push from our over-monopolized, incredibly fragile, just-in-time supply chain collapsing in key sectors. Which I fully expect everyone to blame on too much spending anyways (just like in the 70's) dooming us to austerity and high unemployment until we elect a competent fascist.
e.g. https://mattstoller.substack.com/p/what-we-can-learn-from-a-big-boat
Cost-push inflation--that is, when production costs not rising demand--set off a upward spiral in prices is a risk too. Even so, I find that risk unlikely due to robust trade channels. Of course, we are living through a shipping disruption but it's not a permanent one. Stoller has a point about monopolies but it's overblown some. And breaking up monopolies would almost certainly put some upward pressure on prices. It may still make sense for other reason to reduce monopoly power, but every policy, including current ones, has trade offs. Finally, in no way shape or form to I want a fascist running the United States.
Re monopolies, that first link is the abridged argument. There is also the slightly more wonkish but significantly longer (just shy of 400 pages) argument that starts off with a history of antitrust and then goes into how the current clueless dominant paradigm that practically encourages monopolies took hold, followed by several chapters of specific examples. I highly recommend it if you can find the time.
https://www.minneapolisfed.org/research/staff-reports/monopolies-inflict-great-harm-on-low-and-middle-income-americans
I agree with most of that. But the whole reason monopolies are a problem is because they find a way to jack up unearned profits. That might not always be in the form of higher prices (decreased quality, less innovation, lower wages, less redundancy, ect) but I really doubt, outside of a handful of nitch cases, breaking them up would push prices up, I'd expect the opposite. For Example: https://www.minneapolisfed.org/research/working-papers/because-of-monopolies-income-inequality-significantly-understates-economic-inequality
And yes, we have robust trade channels in the sense that trade in general is very easy, even with a ship stuck in a canal. What we don't have hardly any of is resilience. How many car manufacturers had to stop production because of the semiconductor shortage?
https://www.autocar.co.uk/car-news/industry-news-technology/analysis-chips-are-down-car-makers-shortage-continues
Plastic, which is in almost everything, saw HUGE price spikes with the Texas freeze. For example 60% of PVC production is still offline.
https://finance.yahoo.com/news/plastic-prices-hit-record-high-100000037.html
It's like that everywhere, in every sector. If something happened in India we would be out of 90% of our prescription meds within a few months. It's nuts.
A more recent take on the inflation fear:
https://marcusnunes.substack.com/p/inflation-mongering-is-back
More than 8 months ago, I thought the inflation mongers were mistaken.
https://thefaintofheart.wordpress.com/2020/07/20/after-covid19-inflation/
The macro men gatekeepers seems like the only necessary sentence to me! Theoretical macro has always been a joke. I can invent laughable assumptions and fantastical systems of equations too. But I'm a statistician with integrity, not an on the spectrum Randian asshole trying to take the relevant n of <= 3 and mathify my oligarchic and mean spirited ideology to confuse the plebes into letting me and my rich friends take literally everything in rents and leave zero for wage growth for generations for those who've been allowed in the economy for a while (white men). It proves the point that the "progressive" option is Summers (as opposed to, say, the personable but straight evil Mankiw).