Knife-edge Macroeconomics

Aside from commodity prices, there are just too many goods competing for everyone's dollars. Furthermore, this past recession was in good part caused by excess inventory (which still exists to a degree - look at all the things you can buy used on ebay).

RE: Crying panic about inflation. Everyone not for Clinton did the same thing when he took office. No matter how things change so much stays the same.

Just a thought - isn't the Reserve Bank of Australia a 'major central bank'? Rates were increased here a few days before they were in the UK.

JJM

Good commentary on this issue at econopundit.com

I especially like the analysis using the Fair model, which is predicting higher but still modest inflation through 2007.

Is 3% inflation anyting to worry about?

The point that Greenspan needs to be sacked is when he starts listening to the New York Times editorial page, which has given us Maureen Dowd, Paul Krugman, and Jayson Blair.

The fact of the matter is that the Federal government put too much on it's plate with the Tax Cuts, establishment of Homeland Security, and the Afghani and Iraqi situations. Economic upscale performance could only come with signifcant Inflation. It is my hope it can be held to ten percent. lgl

We're still going to contend with disinflation for quite a while unless the Chinese float the Yuan. Even with the proverbial monitary floodgates opened, we still have so much competition in EVERYTHING due to China, India, and Japan that prices will not rise outside of housing, equities, healthcare, college, and movie tickets (none of which are yet finding any competition from abroad) probably in our lifetimes.

What matters, however, is the EXPECTATION of inflation, not inflation itself. The expectation causes bond yeilds to rise, and that is what we are seeing now (since we are still not seeing actual inflation).