EXPERTS AGREE: INFLATION IS TRANSITORY, INVEST IN THE FUTURE

Roosevelt Institute’s Mike Konczal and J.W. Mason: “What we should be scared of is missing our greatest opportunity in a generation: to use both low-cost, debt-financed federal investments in our infrastructure and revenues from taxes on the wealthy to deal with our deepest and longstanding problems”

As the economy continues to recover from a devastating year, experts agree that the current rise in inflation rates is transitory and urge lawmakers to focus on investing in the nation’s future.

Here’s what they’re saying:

Associated Press: White House: Markets showing little worry about inflation

  • … Financial markets appear to be backing Biden’s case that any price increases are the fleeting result of the United States restarting after the lockdowns caused by the coronavirus pandemic.
  • “The underlying causes of inflation are supply chain disruptions, labor shortages and emergency stimulus which is boosting demand,” said Bill Adams, an economist with PNC Financial Services. “All of these drivers of inflation will be less of an issue in the second half of the year.”

Bloomberg: From Copper to Corn, Markets Show Peak Inflation Fear Has Passed

  • With investors anxious to hear the Federal Reserve’s latest take on inflation after last week’s hot reading, certain corners of the market are already simmering down.
  • Take lumber, one of the biggest gainers among commodities in the past year as stuck-at-home Americans poured money into remodeling. It’s slumped 40% since its peak in May. The booming housing market has also cooled, with an index that measures consumer plans to buy homes tumbling last month. And copper has eased from an all-time high.
  •  for a central bank deciding whether and when to scale back policy assistance, some of the market signals offer reason to continue to be patient.

The New York Times: How to Have a Roaring 2020s (Without Wild Inflation)

  • Inflation can be a genuine problem — if not now, then perhaps soon. But it’s a challenge that can be managed, not a terrifying monster to be avoided at all costs.
  • What we should be scared of is missing our greatest opportunity in a generation: to use both low-cost, debt-financed federal investments in our infrastructure and revenues from taxes on the wealthy to deal with our deepest and longstanding problems — economic stagnation, entrenched inequality and climate change. The coming years could be remembered as the birth of a dynamic, more egalitarian U.S. economy. We just have to avoid getting spooked by the bumps along the way. 
  • Manage the boom, don’t fight it.

 

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