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“0% Inflation” is Actually True August 16, 2022

Posted by geoff in News.
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Was reading Ace’s take on the “0% inflation” business from our illustrious president, and I don’t think he’s right. The easiest way to see what’s going on is to look at the CPI itself, rather than the change in the CPI. I cribbed this graph from the St. Louis Fed:

As you can see, prices flattened out over there on the right, so the month-to-month inflation was 0. So Biden’s victory jig was justified . . . a little. The fact is that the CPI would have been at 270 – 275 right now if we’d kept our old inflation rate. Now it’s at 295, and that’s breaking our backs.

So nothing wrong with what Biden said, but he’s celebrating a bit too much, given the pain consumers are feeling.

Ace was claiming a correspondence to the difference between acceleration and velocity, but it’s really a correspondence of distance and velocity. The CPI isn’t changing, so our velocity is zero, but our distance from where we want to be is still large.

Comments»

1. jam2 - August 16, 2022

It’s kind of like saying the house is no longer on fire because the temperature has plateaued.

2. Brother Tim - August 17, 2022

Or that the patient is stable as he’s wheeled off to the morgue.


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