I remember when John Fowler was complaining about a $400B/year deficit. He said back then that inflation was avoided because of productivity increases due to automation and the exporting of manufacturing to offshore places like China, but once that runs its course, then we'll be paying for these "massive deficits."
And, if things had continued like they were going, that is what would have happened. In fact, we were seeing signs of it starting in 2006.
This was, of course, before Obama came into power and proceeded to rack up the national debt from $12T to $20T
Funny. It was before the Great Economic Bellyflop. Which blew a $2 trillion hole in the economy, remember that? That change made deficits for the short term irrelevant. What was more important was avoiding a global depression. As it was, we were in a liquidity trap and it was touch and go with a deflationary spiral. Which we barely avoided. Compared to that, deficits didn't matter. Worrying about deficits would have been like worrying about what it would cost to pack up your belongings in the car and driving 100 miles when the river is rising and projected to flood your neighborhood. Yeah, it will cost. But compared to the alternatives...
So yeah, inflation is still a concern, and it will probably rear it's ugly head sooner rather than later. We have avoided it for quite a long time, but there is no way we can continue down this path indefinitely.
Indefinitely? No. If we give it enough time, sure it will happen. But, given enough time the Sun will swell into a red giant. It isn't going to happen in the next few years, though. And it won't have anything to do with the deficits we have run in the past few years. And that has nothing to do with Obama being president, though. It has a lot to do with an economy where the 10% have recovered from the near depression but not for everyone else. Inflation, when it comes, will just have to wait until that changes significantly. With most economic growth going to the investor class, it is a lot more likely we will have yet another investment bubble before we see anything like significant inflation. Which is what happens when you have too many dollars chasing too few good investment opportunities instead of too many dollars chasing too few goods.
You cannot just focus on one or two things and hope to have any real idea of what an economy will do. Even if it fits your partisan views. |
