The Inflation Scare Is More Heat Than Light So Far

We’re launching a new regular series today, with my name on it. So let me explain what Bloomberg Opinion is trying to achieve with Authers’ Indicators.

The last six months or so have generated plenty of heat and light over inflation in the U.S. Inflation isn’t necessarily a bad thing; the Federal Reserve is actively trying to increase inflationary expectations in the hope that this will stimulate more economic activity. But it plainly carries risks. In today’s polarized dialogue, the Weimar Republic and Zimbabwe often get invoked on one side of the debate, against contemporary Japan or the deflation that accompanied the Great Depression on the other. There’s no need to be so hyperbolic. Inflation could rise enough to change some of the basic economic and investment assumptions of the last four decades without subjecting us to Weimar-style hyperinflation. The West saw double-figure inflation as recently as 1990; that would have quite an impact if it returned.