[quote=gzz][quote=Rich Toscano]
M1 is not the correct monetary aggregate to use here. That’s a rookie mistake. I humbly suggest you reconsider your level of expertise on this topic.
[/quote]
I agree it is a mistake, but it isn’t my own. I think all monetary aggregates are worthless as indicators of future inflation in the context of developed nations with shrinking skilled workforces and growing economic inequality.
All the “OMG money supply doubled FED IS PRINTING MONEY!!!!” arguments come from the inflatadoomers.
[quote=Rich Toscano]
Along those lines — the bond market has pretty famously been terrible at predicting inflation. So citing breakevens or interest rates as “proof” that you are right is unconvincing and also a bit of an overconfidence red flag.
[/quote]
I don’t agree “the bond market has pretty famously been terrible at predicting inflation.” You accuse me of immodesty, but I am the one that doesn’t presume to know better than the collective wisdom of the market. My best guess for future inflation is exactly what the market is predicting, about 1.6% per year over 5 years and 2% over 30.
I am also not the one here bringing up personal anecdotes about rising prices instead of relying on the expertise of government agencies that have been carefully measuring inflation using many methods over the past 75 years or so. I also don’t think I know better than the Fed, which IMO has been doing a really great job since 2012.[/quote]
The market gets things wrong all the time. it’s not really immodest to point this out. This site wouldn’t exist if markets didn’t get things wrong sometimes! And FWIW – you point it out all the time yourself with regard to other asset classes.
So I don’t think it’s immodest to be skeptical of market prices as proof of anything.
I accused you of immodesty because you are coming across as if you have the inflation thing all figured out. Maybe I’m misreading you, but that’s the vibe I’m getting. The Fed, whom you claim to defer to, is showing a lot more uncertainty and humility on this very complex topic than you are.
