Yesterday (November 30, 2022), the Australian Bureau of Statistics released the latest – Monthly Consumer Price Index Indicator – which is a new data series that the ABS has introduced to augment the quarterly CPI index release. Regular readers will know that I have considered this period of inflation to be transitory, which means that it is likely to dissipate rather quickly once the driving factors abate. It doesn’t mean that those driving factors are necessarily short-term in horizon. They might persist. But the important point is that second-round propagating mechanisms such as the wage-price distributional battle over markups are not present as they were in the 1970s, which is why that episode had a life of its own once the initial oil price supply shock adjustment was made. The other significant aspect of my assessment is that this current inflationary period does not indicate excessive fiscal support nor does it justify central banks hiking interest rates. The drivers at present are originating from the supply-side (pandemic, long Covid, OPEC+ and the Ukraine situation) and are not sensitive to any degree to interest rate changes. I have received a lot of criticism for holding this view. The Modern Monetary Theory (MMT) is dead crowd constantly E-mail me or try to push acrid comments on this blog telling me to get another life or end my existing one. The problem for them is that the latest data from around the world is telling me that this period of inflation is peaking as the supply drivers start to wane.
Bill Mitchell – billy blog
The transitory inflation conjecture gains even more data credenceBill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
A year has gone by since the transitory claim was made. The Biden regime has therefore lost credibility. Pundits on the right will continue to snipe away at this issue.
ReplyDeleteTransitory Does Not Mean Short-Lived
ReplyDeleteBill Mitchell quoted in the article says:
People hear transitory and they think it's like a rain shower and by tomorrow it'll be gone. The way I use the word is that it relates to special conditions that are abnormal and so the duration of the transitory period depends upon how long those abnormal conditions are persisting.
Julian Assange is in transitory detention. Joe Biden's dementia is transitory.
ReplyDeleteWhat is the mechanism by which the dementia will come to an end?
ReplyDeleteHe just called the Marquis de Lafayette “Marcus Laffeeyet “
ReplyDeleteWhat is the mechanism by which the dementia will come to an end?
ReplyDeleteWhen Joe buys the farm.