{"id":5964,"date":"2021-08-31T18:21:07","date_gmt":"2021-08-31T18:21:07","guid":{"rendered":"http:\/\/lonecandle.com\/?p=5964"},"modified":"2021-08-31T18:21:07","modified_gmt":"2021-08-31T18:21:07","slug":"dont-worry-about-inflation","status":"publish","type":"post","link":"https:\/\/lonecandle.com\/?p=5964","title":{"rendered":"Don\u2019t worry about inflation"},"content":{"rendered":"\n

\n\n“the biggest price increases affecting \u201ccore\u201d non-gas or food inflation in recent months have come from new and used cars and air travel. The Biden Council of Economic Advisers<\/a> estimates that at least 60 percent of inflation in June was due to car prices alone, and a big chunk of the rest came from services like air travel increasing in price as everyone rushes back to travel post-pandemic.
<\/p>\n\n\n\n

A huge part of the rise in car prices is a semiconductor shortage<\/a> \u2014 implying that a better way to tackle inflation than the Fed raising interest rates might be an effort to improve supply of semiconductors<\/a>, including boosting production in the US. Biden\u2019s recent efforts to get Taiwan to boost production<\/a> for US car companies is exactly the kind of intervention implied by this analysis.<\/p>\n\n\n\n

The Fed itself seems to be thinking this way; Powell recently testified to Congress<\/a> that \u201csupply constraints have been restraining activity in some industries, most notably in the motor vehicle industry, where the worldwide shortage of semiconductors has sharply curtailed production so far this year.\u201d Lael Brainard, an influential member of the Fed\u2019s Board of Governors, has said the same<\/a>.<\/p>\n\n\n\n

\u201cIf you do think that this supply side story is convincing, then that does really change the way you want to think about this,\u201d Steinsson told me. \u201cSomebody\u2019s going to build a new semiconductor factory at some point \u2026 that gives you a rationale for not using the blunt tool of raising interest rates for the whole economy.\u201d<\/p>\n\n\n\n

Yes, inflation is rising, there is a great deal of uncertainty, and the specter of the \u201970s looms large. But given how much economic pain was visited on millions in the fight against inflation decades ago, it\u2019s encouraging that today\u2019s policymakers seem more willing to consider the path their predecessors did not take.”<\/p>\n\n\n\n

https:\/\/www.vox.com\/future-perfect\/22576069\/inflation-1970s-volcker-powell-federal-reserve<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

“the biggest price increases affecting \u201ccore\u201d non-gas or food inflation in recent months have come from new and used cars and air travel. The Biden Council of Economic Advisers estimates that at least 60 percent of inflation in June was due to car prices alone, and a big chunk of the rest came from services like air travel increasing in price as everyone rushes back to travel post-pandemic.<\/p>\n

A huge part of the rise in car prices is a semiconductor shortage \u2014 implying that a better way to tackle inflation than the Fed raising interest rates might be an effort to improve supply of semiconductors, including boosting production in the US. Biden\u2019s recent efforts to get Taiwan to boost production for US car companies is exactly the kind of intervention implied by this analysis.<\/p>\n

The Fed itself seems to be thinking this way; Powell recently testified to Congress that \u201csupply constraints have been restraining activity in some industries, most notably in the motor vehicle industry, where the worldwide shortage of semiconductors has sharply curtailed production so far this year.\u201d Lael Brainard, an influential member of the Fed\u2019s Board of Governors, has said the same.<\/p>\n

\u201cIf you do think that this supply side story is convincing, then that does really change the way you want to think about this,\u201d Steinsson told me. \u201cSomebody\u2019s going to build a new semiconductor factory at some point \u2026 that gives you a rationale for not using the blunt tool of raising interest rates for the whole economy.\u201d<\/p>\n

Yes, inflation is rising, there is a great deal of uncertainty, and the specter of the \u201970s looms large. But given how much economic pain was visited on millions in the fight against inflation decades ago, it\u2019s encouraging that today\u2019s policymakers seem more willing to consider the path their predecessors did not take.”<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[588,409,483,217,165,1316],"class_list":["post-5964","post","type-post","status-publish","format-standard","hentry","category-article-share","tag-corona","tag-coronavirus","tag-covid-19","tag-economics","tag-economy","tag-inflation"],"_links":{"self":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/5964","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5964"}],"version-history":[{"count":1,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/5964\/revisions"}],"predecessor-version":[{"id":5965,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/5964\/revisions\/5965"}],"wp:attachment":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5964"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5964"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5964"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}