Opinion | History Says Don t Panic About Inflation – The New York Times

Back in July the White House s Council of Economic Advisers posted a thoughtful article to its blog titled, Historical Parallels to Today s Inflationary Episode. The article looked at six surges in inflation since World War II and argued persuasively that current events don t look anything like the 1970s. Instead, the closest parallel to 2021 s inflation is the first of these surges, the price spike from 1946 to 1948.

Wednesday s consumer price report was ugly; inflation is running considerably hotter than many people, myself included, expected. But nothing about it contradicted C.E.A. s analysis on the contrary, the similarity to early postwar inflation looks stronger than ever. What we re experiencing now is a lot more like 1947 than like 1979.

And here s what you need to know about that 1946-48 inflation spike: It was a one-time event, not the start of a protracted wage-price spiral. And the biggest mistake policymakers made in response to that inflation surge was failing to appreciate its transitory nature: They were still fighting inflation even as inflation was ceasing to be a problem, and in so doing helped bring on the recession of 1948-49.

via www.nytimes.com

Cue hysterical laughter.

But to be fair, Krugman might be right. Of course, he might be wrong too. But if he is wrong, I’m sure he’ll have a reason that will convince his loyal readers. He’s living proof that economics is not a real Nobel Prize. But, I’m sure he owns plenty of gold and Bitcoin.