U.S. inflation

Circumstances and Results Surrounding Previous Times When the Fed Raised Interest Rates in Increments Greater than a Quarter Percentage Point

April 10, 2022

The last federal funds rate hike to exceed 25 basis points was an increase in May 2000 that culminated a tightening cycle of 175 basis points over a period of eleven months that began in mid-1999. The cycle commenced with the perception of a heightened inflation risk. CPI inflation at the time was only 2.0%, […] More

Two Characteristics of U.S. Inflation Spikes When Caused by Supply Bottlenecks

November 15, 2021

The former economics Nobel prize-winner and current New York Times OP-Ed columnist Paul Krugman wrote a piece last week asserting that elevated inflation this year more closely resembles patterns in 1947 than in 1979. It’s an interesting take, original at first glance yet obvious when one reflects on the the root cause of what’s driving […] More

Comment on Inflation

April 9, 2019

The current U.S. economic upswing is just three months short of setting a new record for longevity, and yet inflation remains stubbornly below the Federal Reserve’s target. Just as it proved frustratingly hard to lower inflation sustainably during the last third of the twentieth century, policymakers in the United States, Japan, and Europe have grappled […] More

Inflationary Amber Alert

January 13, 2017

After the election of Donald Trump, the dollar, U.S. equities, long-term interest rates, and commodities rose initially. Some of these changes have been pared, but they reflect a changed perceived economic outlook. Analysts who follow fundamental economic trends became more optimistic about economic growth and the likelihood of higher inflation. Market players were very mindful that […] More

Note on Oil, the Dollar, and Inflation

February 18, 2015

The genesis of this comment lies in the 1970s, not because of similarities between then and now but rather because the current period seems on anecdotal observation to be an inversion of then.  There were two oil price shocks in the 1970s, a quadrupling of crude in early 1974 and a second sharp upward thrust […] More

America’s Overstated Inflation Scare

November 13, 2012

Just about everyone knows that the Federal budget deficit soared in the Great Recession when revenues plunged.  Less widely understood is the fact that the gap has been subsequently grinding downward by about a percentage point per year and is now hovering around 7% of GDP.  Monetary policy has accommodated America’s weak economic environment.  Three […] More

An Updated Look at How the U.S. Economy Performed Under Democratic and Republican Presidencies

August 8, 2011

The most visited post among all 3,002 articles on the Currency Thoughts web site remains one of the first, a comparative study of how five U.S. vital signs behaved when the president was a Democrat and when that person was Republican.  That article screened on August 19, 2008, less than a month before the collapse […] More

U.S. Deflation Risk: Fact or Fancy?

November 17, 2010

The Fed is engaging in a second round of quantitative easing to ensure that the United States doesn’t slip into deflation.  Deflation can be like a stroke in that full functionality sometimes never returns.  Excessive inflation, in contrast, can always be conquered if monetary authorities have enough political backbone, which is why they tend to […] More

Assessing the Greater Long-Term U.S. Price Risk: Inflation or Deflation

July 6, 2010

The quirky discontinuities in U.S. tax law have made 2010 a critically important year for household financial planning.  A critical assumption in this process involves price stability.  Some experts believe the jump in Federal deficit spending and ballooning Fed balance sheet will cause a return to high inflation.  I’m in the camp that anticipates continuing […] More