We’ve put it off for a long time, but it’s time to talk about the I-word. Nine letters, three syllables: inflation.
The Federal Reserve likes it around 2%, but it’s been a long time since we’ve gotten there. As this economy inches back on track, consumer prices are going up and the investor class is getting spooked. Meanwhile, Fed Chair Jay Powell is keeping interest rates low. So what’s going on?
“We had a huge supply and demand shock called the COVID crisis, and we’re beginning to get out of it,” said Brown University political economist Mark Blyth. “You’ve got quite naturally a lot of what we call bottlenecks, a lot of supply shortages, across different sectors that are all coming out of hibernation at once.”
In other words: Breath in, breath out. On today’s show, Blyth helps us get inside the heads of the different parties here and takes us back some 40 years to when inflation was actually a problem in the United States. We’ll get insights into “Bidenomics” and why it’s unlikely Powell will blink and pull the interest rate lever.
“If, essentially, six weeks of shouting from the window that the sky is falling is enough to alter Fed policy, you don’t have Fed policy.”
Later on, we’ll hear from a listener enjoying Kai’s “Bizarro Barbaro” and a teacher who says the hybrid classroom is no Economics on Tap. Plus, a voice memo from a member of our team we don’t hear from much.
When you’re done listening, tell your Echo device to “make me smart” for our daily explainers. This week we’re explaining the difference between a pyramid scheme and a Ponzi scheme. And don’t forget to subscribe to our newsletter! You can find the latest issue here.
Here’s everything we talked about today:
- Listen to Blyth’s last appearance on our show, from March, when we talked about Reaganomics.
- “Jump in Consumer Prices Raises Stakes in Inflation Debate” from The New York Times
- “Summers Says U.S. Inflation Rising Faster Than Even He Predicted” from Bloomberg
- “Consumer expectations for inflation soar” from Axios
- “DMV investigating Tesla’s self-driving claims” from the Los Angeles Times
- “Biden, Yellen Seek Backing for $2.3 Trillion Infrastructure Package” from The Wall Street Journal
- “Will Biden’s plan for global tax reform hurt his beloved Ireland?” from Marketplace’s Stephen Beard
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