Disinflation and inflation: License given

Disinflation and inflation over the last few decades show that disinflationary signaling and inflationary actions have worked together to increase prices, drop buying power

Exhibit A: The Continuum of gently declining long-term Treasury bond yields that have licensed policymakers to print inflation over the last couple of decades. The chart also shows the “Ruh Roh!” moment that this blessed continuum of benign macro signaling was ruptured in 2022.

The 30 year Treasury bond yield Continuum message is that disinflation and inflation have worked together

Exhibit B: Amid that disinflationary signaling, the BLS checks in with a handy inflation calculator. I used 2000 to February, 2023 and got this reading of how far the value of our (funny) munny has dropped.

BLS inflation calculatotr
Source: BLS

The questions for 2023 is ‘what happens if the lever/s policymakers always were able to pull in times of crises snaps off in their hands? Or what if they are precluded from even trying to pull it? Maybe there are new levers out there that I just don’t see. Maybe. But maybe not. I am not trying to muck rake or doom say. Just trying to ask questions that seem valid.

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This Post Has 2 Comments

  1. pandatplgmailcom


    If the Bureau of Labor Statistics posts a calculator for value of money over time degrading at just over an average of 20% per year how can they bold face inflation of under 10% per year and remain credible?


    1. Gary

      Beats me, DG. This stuff is filled with exclusions and stipulations. Who knows how they’re measuring it.

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