Interesting how quickly the people responsible for minding the levers of inflation call out that it will be temporary when at the same time saying what’s happening is unprecedented...
Note: Not claiming anything here about where prices will head next.
Bonus episode:
Money is created through debt. Money can be taken hostage, by taking it out of circulation aka saving it. However, that money is needed to pay the debt back. There is a due date for debt repayments and this is where the problems start: There is no due date for deposits to be spent and thus returned to the borrower...
From a purely logical perspective default is inevitable given the above conditions and it requires the destruction of the deposits and thus the confiscation of the deposits. How does this happen in practice? Inflation, negative interest rates, wealth taxes or bank bankruptcy resulting in the loss of deposits. Maybe expiring CBDC offer a fifth option by forcing spending directly. You are of course allowed to spend your money on gold or stocks.
I agree with you that it’s difficult to predict whether inflation will or won’t be transitory and I suspect that if you got Powell to speak honestly about the issue he’d tell you that his confidence in his projection is closer to 2/3 than 99/100.
He does have a lot of quite powerful tools that make it easier for him to be correct, such as expanding the money supply by an unlimited amount and defining the inflation metric.
you're not wrong, but I definitely had a good laugh at this.
Pretty easy to win the game when you can change the rules whenever you please.