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Comment by kevinmchugh | Hacker News Reader

I find it very strange to read that "inflation is coming" was seen as a fringe view in 2020? "Inflation later is better than a recession or depression now" was the thinking behind all the increased government spending in 2020. Maybe "future inflation will be worse than any consequences today" was fringe, but I think at least eg Larry Summers was saying that.

I don't understand macroeconomics but "government spending causes inflation" is a pretty mainstream ideological precept - the opposite opinion is fringe.

Edit: maybe I didn't put enough weight on "massive" when reading the above comment

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"government spending causes inflation is a pretty mainstream ideological precept - the opposite opinion is fringe."

Hoo boy.

"the current Fed chair, Jerome H. Powell, has dismissed claims that the Fed’s money-printing is fueling today’s price spiral, emphasizing instead the disruptions associated with reopening the economy. Like his most recent predecessors, dating to Alan Greenspan, Powell says that financial innovations mean there no longer is a link between the amount of money circulating in the economy and rising prices"

https://www.washingtonpost.com/business/2022/02/06/federal-r...

You're right that the idea government money printing doesn't cause inflation is fringe absurdity. Unfortunately the fringe that believes in it are central bankers.

> Unfortunately the fringe that believes in it are central bankers.

What seems more likely?

- Central bankers who control the economy do not understand the basic principles of the system they manage.

- They lie about their motivations for political reasons.

Sure. We're well into "Hard to make a man understand something if his salary depends on him not understanding it" territory here.

The more interesting question is, if you incentives are strong enough to want to deny the nature of a system, do you become a liar or do you genuinely stop understanding it? Was Yellen's bafflement at the non-transitory inflation a mere act, or was it genuine confusion caused by a core corruption of her own understanding of basic economics?

Mainstream economics including people like the Fed have been substantially more worried about deflation than inflation for the last 5-10 years. Many thought that inflation was dead forever and that their biggest problem was that they couldn't print money fast enough over the longterm to avoid a deflationary bust.

It's hard to understate the degree to which fed economists didn't see this coming.

Larry Summers was in the minority among economists.

https://www.wsj.com/articles/on-inflation-economics-has-some...

In summer 2020 local investment advisors were running radio ads with the phrase “worried about inflation? Talk to us”.

It was pretty obvious what was about to happen!

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