09-14-2021, 09:11 AM
** 14-Sep-2021 World View: Meaning of inflation
People have absolutely no clue what inflation means. I just heard
someone on tv ranting about inflation, and how food prices are being
pushed up by transportation costs. He was asked how long it would
take for inflation to come down. He said, "Give me a break! Oil is
$70 a barrel. Do you think the Saudis are going to take less? Do you
think Russia is going to take less?"
That is monumental ignorance on what inflation is. He has no idea
what he's talking about.
If the price of oil goes from $60 to $70, then there is inflation that
quarter. But if the price of oil stays at $70, even though that might
be considered a high "inflationary" value, then it's still 0%
inflation in the next quarter.
There's a lot of talk about how the producer price inflation was high,
and that may be true. But if consumers find a way to buy alternative
products and services at lower prices, then the CPI will not rise as
much.
People have absolutely no clue what inflation means. I just heard
someone on tv ranting about inflation, and how food prices are being
pushed up by transportation costs. He was asked how long it would
take for inflation to come down. He said, "Give me a break! Oil is
$70 a barrel. Do you think the Saudis are going to take less? Do you
think Russia is going to take less?"
That is monumental ignorance on what inflation is. He has no idea
what he's talking about.
If the price of oil goes from $60 to $70, then there is inflation that
quarter. But if the price of oil stays at $70, even though that might
be considered a high "inflationary" value, then it's still 0%
inflation in the next quarter.
There's a lot of talk about how the producer price inflation was high,
and that may be true. But if consumers find a way to buy alternative
products and services at lower prices, then the CPI will not rise as
much.
