Commodity prices are confirming Krugman’s predictions.

To the pile of Paul Krugman’s accurate predictions add this one: he’s long said that there is no threat of enduring, significant inflation and none is on the horizon. He’s pointed out that the surge in commodity prices is due to temporary demand factors originating in China and India and not to a lasting change in the general price level. The “inflation hawks,” however, have had their way at the Fed. It’s now clear that, so far at least, Krugman’s been right and the inflation hawks have been wrong:

You may recall that last fall and into the spring there were a lot of people — notably, but not only, the Ron Paul types — who pointed to rising commodity prices and claimed that they were a signal of inflationary doom just over the horizon.

Ahem:

So are they now going to scream about looming deflation and urge the Fed to do more easing? Heh.

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About Guy N. Texas

Guy N. Texas is the pen name of a lawyer living in Dallas, who is now a liberal. He was once conservative, but this word has so morphed in meaning that he can no longer call himself that in good conscience. Guy has no political aspirations. He speaks only for himself.
This entry was posted in Economic policy, Economics, Financial markets, News, Politics. Bookmark the permalink.

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