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Allison Schrager

Inflation Beast Won't Lie Quietly Again for a Long Time

If the pandemic taught us anything about monetary policy, it's that the Fed's success with rate targets has always been an illusion.

Get used to rising prices.

Get used to rising prices.

Photographer: Frederic J. Brown/AFP via Getty Images

We woke the beast, and now we may have to learn to live with it. After more than 20 years of low, stable inflation, it's come roaring back — at more than 9% — and it may never return to pre-pandemic levels. We've already lost the benefits of our former economy: low interest rates and pay raises that actually make you richer. Now we also have to manage a new risk in our lives, the beast we thought we had tamed. 

The pandemic changed many things, and it's forced me to give up, reluctantly, my long-held belief that inflation is something we know how to control; that policy makers can pick an inflation number, maintain it, and all will be well; that Americans will always know what our dollars are worth.