[lbo-talk] Fwd: 1970's redux and where do we go from here?

[Seth Ackerman]

Doug Henwood wrote:

> Seth Ackerman wrote:
>
>> But it's only being driven by oil this time. Core inflation isn't 
>> particularly high. Inflation isn't built into the structure of wages 
>> and prices like it used to be.
>
>
> No it's not. But Wall St is getting a little carried away looking only 
> at the core (which excludes food & energy); that strips away almost a 
> quarter of the index's market basket. The headline CPI is at 3.4% 
> year-on-year, which is well above the 1-2% that used to be regarded as 
> price stability.
>

In theory, a period of higher inflation would probably do the US some 
good, what with all this household debt. But isn't it a problem that 
inflation is so concentrated in food and energy (and transport)? It 
means that while most people are producing low-inflation output, they're 
consuming a lot of high-inflation output. So it ends up more like a tax 
than a way of inflating away debt.

Seth