[Rich Toscano]

OK, there are assumptions in there, as in any prediction of potential outcomes. But I still feel like I provided a laundry list of things that could potentially cause inflation to rise — none of them are sure things, but they don’t have to be, because (to me anyway) we are talking about risks and probabilities. I think some of them are pretty decent probabilities, but of course, that all comes down to speculation on the future.

You are correct that we’ve increased government debt for a long time, but surely you agree that just because it hasn’t caused a problem yet, doesn’t mean it never will. (Look for instance at the increase in mortgage debt in this country — it went up and up and up, with that consistency lulling people into a false sense of security, until people realized that security was misplaced).

You are also correct that we’ve had loose monetary policy for a long time. I believe that has largely fed into inflation in asset prices rather than in consumer prices. That could continue for a while. But it surely won’t be indefinite, and it requires certain conditions — foreign CB’s buying up lots of our debt is a notable one — that cannot be depended upon to last. (For background on loose monetary policy vis. asset prices I very, very highly recommend Grantham’s “Night of the Living Fed” essay).

I think there may be some timeline confusion here. You are asking, what WILL cause inflation in the near future. Well, nothing WILL (not dependably, if you see what I mean). But some stuff might, if they happen in the near future. Those are the “hypotheticals” I outlined in the earlier comment. So just to be clear, I don’t think inflation is guaranteed in the near future. (Nor is a lack of inflation, for that matter).

I think the OP is looking farther out. For his scheme to work, inflation doesn’t have to be higher next year — it has to be higher on average over the next 30 years. So it’s really more of a long-term consideration. My opinion on the long term is that considering the relative lack of productivity in our economy, increasing competition for resources, the chance of a loss of confidence in dollars and/or ust’s, and most of all how difficult it would be to reduce our debt burden in real terms, I think inflation will be higher than most people expect. But that is, of course, speculation and my own opinion.

[Rich Toscano]

OK, there are assumptions in there, as in any prediction of potential outcomes. But I still feel like I provided a laundry list of things that could potentially cause inflation to rise — none of them are sure things, but they don’t have to be, because (to me anyway) we are talking about risks and probabilities. I think some of them are pretty decent probabilities, but of course, that all comes down to speculation on the future.

You are correct that we’ve increased government debt for a long time, but surely you agree that just because it hasn’t caused a problem yet, doesn’t mean it never will. (Look for instance at the increase in mortgage debt in this country — it went up and up and up, with that consistency lulling people into a false sense of security, until people realized that security was misplaced).

You are also correct that we’ve had loose monetary policy for a long time. I believe that has largely fed into inflation in asset prices rather than in consumer prices. That could continue for a while. But it surely won’t be indefinite, and it requires certain conditions — foreign CB’s buying up lots of our debt is a notable one — that cannot be depended upon to last. (For background on loose monetary policy vis. asset prices I very, very highly recommend Grantham’s “Night of the Living Fed” essay).

I think there may be some timeline confusion here. You are asking, what WILL cause inflation in the near future. Well, nothing WILL (not dependably, if you see what I mean). But some stuff might, if they happen in the near future. Those are the “hypotheticals” I outlined in the earlier comment. So just to be clear, I don’t think inflation is guaranteed in the near future. (Nor is a lack of inflation, for that matter).

I think the OP is looking farther out. For his scheme to work, inflation doesn’t have to be higher next year — it has to be higher on average over the next 30 years. So it’s really more of a long-term consideration. My opinion on the long term is that considering the relative lack of productivity in our economy, increasing competition for resources, the chance of a loss of confidence in dollars and/or ust’s, and most of all how difficult it would be to reduce our debt burden in real terms, I think inflation will be higher than most people expect. But that is, of course, speculation and my own opinion.

[Rich Toscano]

OK, there are assumptions in there, as in any prediction of potential outcomes. But I still feel like I provided a laundry list of things that could potentially cause inflation to rise — none of them are sure things, but they don’t have to be, because (to me anyway) we are talking about risks and probabilities. I think some of them are pretty decent probabilities, but of course, that all comes down to speculation on the future.

You are correct that we’ve increased government debt for a long time, but surely you agree that just because it hasn’t caused a problem yet, doesn’t mean it never will. (Look for instance at the increase in mortgage debt in this country — it went up and up and up, with that consistency lulling people into a false sense of security, until people realized that security was misplaced).

You are also correct that we’ve had loose monetary policy for a long time. I believe that has largely fed into inflation in asset prices rather than in consumer prices. That could continue for a while. But it surely won’t be indefinite, and it requires certain conditions — foreign CB’s buying up lots of our debt is a notable one — that cannot be depended upon to last. (For background on loose monetary policy vis. asset prices I very, very highly recommend Grantham’s “Night of the Living Fed” essay).

I think there may be some timeline confusion here. You are asking, what WILL cause inflation in the near future. Well, nothing WILL (not dependably, if you see what I mean). But some stuff might, if they happen in the near future. Those are the “hypotheticals” I outlined in the earlier comment. So just to be clear, I don’t think inflation is guaranteed in the near future. (Nor is a lack of inflation, for that matter).

I think the OP is looking farther out. For his scheme to work, inflation doesn’t have to be higher next year — it has to be higher on average over the next 30 years. So it’s really more of a long-term consideration. My opinion on the long term is that considering the relative lack of productivity in our economy, increasing competition for resources, the chance of a loss of confidence in dollars and/or ust’s, and most of all how difficult it would be to reduce our debt burden in real terms, I think inflation will be higher than most people expect. But that is, of course, speculation and my own opinion.

[Rich Toscano]

OK, there are assumptions in there, as in any prediction of potential outcomes. But I still feel like I provided a laundry list of things that could potentially cause inflation to rise — none of them are sure things, but they don’t have to be, because (to me anyway) we are talking about risks and probabilities. I think some of them are pretty decent probabilities, but of course, that all comes down to speculation on the future.

You are correct that we’ve increased government debt for a long time, but surely you agree that just because it hasn’t caused a problem yet, doesn’t mean it never will. (Look for instance at the increase in mortgage debt in this country — it went up and up and up, with that consistency lulling people into a false sense of security, until people realized that security was misplaced).

You are also correct that we’ve had loose monetary policy for a long time. I believe that has largely fed into inflation in asset prices rather than in consumer prices. That could continue for a while. But it surely won’t be indefinite, and it requires certain conditions — foreign CB’s buying up lots of our debt is a notable one — that cannot be depended upon to last. (For background on loose monetary policy vis. asset prices I very, very highly recommend Grantham’s “Night of the Living Fed” essay).

I think there may be some timeline confusion here. You are asking, what WILL cause inflation in the near future. Well, nothing WILL (not dependably, if you see what I mean). But some stuff might, if they happen in the near future. Those are the “hypotheticals” I outlined in the earlier comment. So just to be clear, I don’t think inflation is guaranteed in the near future. (Nor is a lack of inflation, for that matter).

I think the OP is looking farther out. For his scheme to work, inflation doesn’t have to be higher next year — it has to be higher on average over the next 30 years. So it’s really more of a long-term consideration. My opinion on the long term is that considering the relative lack of productivity in our economy, increasing competition for resources, the chance of a loss of confidence in dollars and/or ust’s, and most of all how difficult it would be to reduce our debt burden in real terms, I think inflation will be higher than most people expect. But that is, of course, speculation and my own opinion.

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[Rich Toscano]

That is a graph of the rate of inflation. Except for a brief dip into negative territory in 09 (and a couple even briefer dips earlier), the rate of inflation has been positive the whole time… that means prices at Ralphs are going up.

[Rich Toscano]

That is a graph of the rate of inflation. Except for a brief dip into negative territory in 09 (and a couple even briefer dips earlier), the rate of inflation has been positive the whole time… that means prices at Ralphs are going up.

[Rich Toscano]

That is a graph of the rate of inflation. Except for a brief dip into negative territory in 09 (and a couple even briefer dips earlier), the rate of inflation has been positive the whole time… that means prices at Ralphs are going up.

[Rich Toscano]

That is a graph of the rate of inflation. Except for a brief dip into negative territory in 09 (and a couple even briefer dips earlier), the rate of inflation has been positive the whole time… that means prices at Ralphs are going up.

[Rich Toscano]

That is a graph of the rate of inflation. Except for a brief dip into negative territory in 09 (and a couple even briefer dips earlier), the rate of inflation has been positive the whole time… that means prices at Ralphs are going up.

[Rich Toscano]

[quote=pri_dk][quote=Rich Toscano]Prices at your local Ralphs have in fact been rising. They have at Albertson’s too (at least according to the CPI).[/quote]

Rich, can you provide some stats on that?

http://blogs.wsj.com/marketbeat/2010/12/15/nov-cpi-offers-little-to-inflationmongers/?KEYWORDS=inflation

http://blogs.wsj.com/economics/2010/12/15/economists-disagree-on-future-path-of-inflation/?KEYWORDS=inflation

http://online.wsj.com/article/SB10001424052748704828104576021262542609064.html?KEYWORDS=inflation

I appreciate the rest of your response, but there are a lot of hypotheticals in your argument.

As far as inflation being the only “politically expedient” way to manage the debt, it does makes sense. But I recall hearing that same claim during the Reagan administration (I was one of the folks making the claim). More than twenty years later, it still hasn’t happened.

A fundamental problem with the “inflate the debt away” argument is that it assumes that there are people in power with a “master plan” and a long-term vision on the economy (10+ years). There really is nobody in government making these sorts of decisions (if there is, they are cycled out every few years anyway.) Now it may be the case that the culmination of short-term decisions will ultimately lead to unstoppable inflation in the long-term. But even if this does happen, the long-term may me much further out than many are predicting.[/quote]

Go to the BLS website and chart food inflation… grocery store was the example you used.

You might have been right in the 80s, eventually, but the Asian mercantilists came in and propped up our currency while bringing down goods prices, which extended the fun for quite a while (and may yet do so). But someday that will stop if not go in reverse.

I agree that there is no master plan. Didn’t mean to imply that, as I agree that politicians are motivated by the short term. I meant that the aggregate decisions will move toward an inflationary outcome because there is really no other politically expedient outcome (and as a bonus, inflationary policy is appealing to short-sighted politicians on its own “merit”).

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