Keeping the “inflation fear flame alive”

That´s Kathleen Madigan in her WSJ column today. First she “blows”:

Wheat is not oil.

The drought in parts of the U.S. farm region has caused prices for commodities including corn, wheat and soybeans to jump this summer. But the rise in farm prices won’t have anywhere near the negative impact on consumer inflation that would come from a similar gain in oil.

Then she “bites”, not letting us forget the Fed has a well-defined inflation target to protect:

If no other price pressures build, future inflation would remain close to the Federal Reserve‘s 2% target rate.

Perhaps the bigger worry in the food price outlook is the possible impact on foreign wages. Food makes up a much larger share of total inflation in emerging economies. If businesses in emerging markets have to make higher cost-of-living pay increases to their workers, higher labor costs might lift prices of imports coming to the U.S.

That hasn’t shown up in the import price data yet, but a persistent uptrend in global food prices could change the dynamic.

Seriously, I think she put on her namesake comedian hat before writing the piece!

8 thoughts on “Keeping the “inflation fear flame alive”

  1. Hurricanes, droughts, why do we have to fear even harder money every time one commodity or another goes up for a while? This is ridiculous.

  2. Does she not know what sort of inflation the Fed is supposed to be targeting? Did she not take macro in college?

    (Then again, I’m not sure the Fed knows what sort of inflation the Fed is supposed to be targeting?)

  3. Yes, I have been tossing about some phrases. “Inflationphobiacs.” “Inflation Derangement Syndrome.” “Chicken Inflation Littles.” “Inflation Hysteria.”

    There was a rime when many events were framed in terms of what it meant to the Cold War. if we launched a space ship, if our kids were math stupid, even if we discriminated against minorities, it was framed in terms of the Soviets taking advantage of it.

    No some react to everything with a genuflection to inflation.

  4. It would’ve been nice if her article has mentioned that the US 10-year breakeven has declined from 2.15% to 2.00% while corn has gone from $5.40/bu to $7.00/bu. Or perhaps that the same metric used to be anchored in the 2.2-2.4% range in the good ol’ days of monetary equilibrium…

  5. “the good ol’ days of monetary equilibrium…” Let’s see, should NGDP be (visually) represented by an anchor? Or better yet, a compass where in N-G-D-P, N is true north.

  6. The WSJ is now nothing but a propaganda rag which at worst is intent on fanning the flames of discontent so the hard money Jacksonians can foist the life of subsistence farming on every citizen of the US. It’s shameful ignorance at best.

  7. Marcus, have you thought about updating your graphs for the last few years with the new BEA figures? I’m particularly interested in seeing what the NGDP graph looks like now.

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