Many were skeptical and they were right to be skeptical. We're now experiencing inflation the likes of which we've not seen for decades. And it isn't over. It's not unlikely we'll enter a period of hyperinflation soon that breaks all historical records for the US.
> It's not unlikely we'll enter a period of hyperinflation soon that breaks all historical records for the US.
I'd say this is pretty unlikely. This is like saying that because the weatherman was wrong and it's 10 degrees colder today than predicted we should expect a new ice age to hit next week.
There is a limit to the debt-to-GDP ratio before reality takes over. Baked into the assumptions on debt is inherent growth in GDP. It's rare, but there are scenarios where you may see real contraction in GDP and, frankly the present geopolitical and global economic climate is ripe for such events. If that happens, then the US entering some inflationary spiral to service debt isn't totally 100,000 year "ice-age" ridiculous. It's more like ~100 year cold snap.
I agree, but I would be surprised if it is 8% again for the coming year, given job market is still hot, supplies are still short, the war in Ukraine will likely last at least another year, and the government still want to spend a lot of money and is unlikely to raise rates very much more than 0.25% per quarter.
> It's not unlikely we'll enter a period of hyperinflation soon that breaks all historical records for the US.
Hyperinflation is typically defined as at least 50% monthly inflation (about 13000% annualized).
The highest monthly inflation since it has been tracked in US history is a 23.7% annualized rate in June 1920 (not a monthly rate, an annualized rate), the highest estimated annual inflation (obviously, pre-regular-tracki g) is just under 30% for 1778.
So any hyperinflation would be orders of magnitude beyond anything seen in US history, sure.
But I’d like to see your quantification of “not unlikely” and the supporting analysis.
transitory likely refers to the fact that supply chains and production of "stuffs" halted for an extended period of time due to the pandemic.
The Feds made a prediction, where all else being equal, that they expected supply chains to free up "soon", and it isn't a systemic issue. They guessed wrong, as the world wasn't ready to return back to prior productivity levels. This prediction, however, isn't supposed to be used as a basis for decision making for the common person.
Most of the market called out the Fed for using the term "transitory" considering the Government was printing money left and right. Now we have had a huge inflation jump as predicted.
The Fed had access to the same, if not better, data than everyone else. A big part of shortages was a rise in demand.
The gov was giving out money and the fed was "printing" trillions [printer go brrrrt" memes and all] adding to national debt. How in the name of any working economic theory can they think that WILL NOT lead to inflation? Were they in an alternate universe?
