PODCAST: "Hexapodia" is þe Key Insight! XLI: Inflation & Its Vicissitudes

Key Insights:

1. The only way to buy insurance against the fiscal theory of the price level’s becoming relevant for the inflation outlook is to keep Trump and Trumpists out of office

2. We have one political party that could well, someday, turn us inflation-wise into “Argentina”: the Republicans.

3. But thankfully we have only one such political party.

4. Democrats need to develop a policy framework for a time of inflation: capacity-building progressivism.

5. We do not yet know whether what the Fed has done is sufficient to return inflation to its 2%/year Core PCE target.

6. If the Fed overdoes inflation fighting, we might well find ourselves back at the zero lower bound on interest rates—and that would be a hell of a mess, much worse than having Core PCE inflation at 5%/year for an extra year or so.

7. Hexapodia!

References:

• Olivier Blanchard: Inflation and unemployment. Where is the US economy heading? (August 8, 2022 1:30 PM)

• Olivier Blanchard, Alex Domash, and Lawrence H. Summers: The Fed is wrong: Lower inflation is unlikely without raising unemployment (August 1, 23022 11:15 AM)

• Olivier Blanchard, Alex Domash, and Lawrence H. Summers: Bad news for the Fed from the Beveridge space (July 2022)

  Olivier Blanchard, Romain Duval, Pierre-Olivier Gourinchas, Anna Stansbury, and Betsey Stevenson: Labor Market Tightness in Advanced Economies (March 31, 2022 1:00 PM

• Olivier Blanchard: Why I worry about inflation, interest rates, and unemployment (March 14, 2022 1:45 PM)

+, of course:

• Vernor Vinge: A Fire Upon the Deep <https://archive.org/details/fireupondeep00ving_0/mode/1up>