As reported by Reuters on Wednesday:
Yes, inflation is back, and you should probably be relieved if not outright happy.
It seems strange to start a news article with the above sentence. When they talk of inflation, they’re talking about price increases as measured through various inflation calculations. For a news source, supposedly unbiased, they seem unaware of or purposely ignore the loss of dollar purchasing power and currency debasement. What they’re celebrating is an increase in the cost of living for everyone, hurting those at the lowest level of the income bracket the most.
As one of the most trusted news sources in the world explains:
That is the verdict of the world’s top central banks, who hope they have hit the sweetspot where healthy economies see prices gently rising—but not spiralling out of control.
Notice the use of euphemism or vague term sweet spot that the marriage between mainstream media and mainstream economics uses to explain concepts that cannot be conveyed. It happens frequently:
Backed by vast government spending, central bankers unleashed unprecedented monetary firepower in recent years to get this result. Indeed, anything less would suggest the biggest experiment in central banking in the modern era had failed.
A large part of this government spending was thanks to central banks, while the monetary firepower just means expansion of the money supply, also called inflation, coupled with historically low interest rates. The word experiment is often used; this is unfortunate because those in charge of this experiment are among the richest and most powerful people in the world. It’s easy for them to experiment because they will never suffer the consequences of failure, unlike the rest of society, who do.
The possibility of repeating 1970s stagflation was dismissed as quickly as it was mentioned:
The current inflation rise is not without risk, of course, but comparisons with 1970s style stagflation—a period of high inflation and unemployment combined with little to no growth—appear unfounded.
Despite noting that:
On first look, current inflation rates do indeed look troubling. Price growth is already over 5% in the United States … well above policy targets and at levels not seen in well over a decade.
But according to the author the price increases we’re seeing are only temporary and due to the reopening of the economy, acceptable because an expert from the European Central Banks is quoted as having said:
The current inflationary spike can be compared to a sneeze: the economy’s reaction to dust being kicked up in the wake of the pandemic and the ensuing recovery.
Over half a dozen other central bankers are said to be relieved that “price pressures are finally building and policy normalisation, a taboo subject for years, is back on the agenda,” while one policymaker who asked to be left nameless said that “[i]f inflation doesn’t rise now, it never will…. These are the perfect conditions, this is what we worked for.”
For all the meetings, planning, review of data, and deliberation, at last central bankers of the world are rejoicing over what they have done with our money. Debt levels, money supply, interest rates, and prices are in territories some thought were unimaginable. The theory or model behind any of this is still not explained by our planners.
Where some see victory, others see a time bomb. It would have been nice if Reuters had mentioned some of the problems associated with inflationism as economic policy. But who wants to put a damper on things? For now, it’s a celebration of central planners and how they brought their long sought after inflation back to the West, with the hope that the years that follow will similarly go according to plan, lest they’re forced to intervene again.
