David Frum has a nice column starting with the weirdness of the upsurge in cable news and talk radio ads for gold, and pivoting to the phantom menace of inflation:
That may be a price worth paying for a hedge against inflation. At today’s prices, however, investors should ask themselves some hard questions about how real the inflation risk is — and how much it is worth paying to insure against that risk.
Most U.S. indices continue to warn of deflation ahead, not inflation.
Consumer price indexes are dropping, not rising. Average weekly wages are dropping too. For the first time since 1975, there will be no cost-of-living increase in U.S. Social Security payments to retirees. (President Obama is proposing to distribute an additional $250 per retiree anyway, but this largesse will require a vote in Congress.)
This Planet Money chart nicely illustrates the inflation we’re not experiencing:
The inflation fears we’re seeing are some kind of macroeconomic moral panic. Surely we’re going to reap the whirlwind for all this spending! But the evidence suggests that we’re not. And the very same evidence also suggests that it’s not the case that we’re in some kind of special kind of business cycle downtown that can’t be remediated through stimulation of aggregate demand. As long as inflation is abnormally low, we need to (a) stop worrying about inflation (b) engage in more expansion.
Previous in TP Yglesias
By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.