PODCAST: "Hexapodia" is þe Key Insight! XLI: Inflation & Its Vicissitudes

Key Insights:* The only way to buy insurance against the fiscal theory of the price level’s becoming relevant for the inflation outlook is to keep Trump and Trumpists out of office* We have one political party that could well, someday, turn us inflation-wise into “Argentina”: the Republicans.* But thankfully we have only one such political party.* Democrats need to develop a policy framework for a time of inflation: capacity-building progressivism.* We do not yet know whether what the Fed has done is sufficient to return inflation to its 2%/year Core PCE target.* If the Fed overdoes inflation fighting, we might well find ourselves back at the zero lower bound on interest rates—and that would be a hell of a mess, much worse than having Core PCE inflation at 5%/year for an extra year or so.* Hexapodia!References:* Olivier Blanchard: Inflation and unemployment. Where is the US economy heading? (August 8, 2022 1:30 PM)* Olivier Blanchard, Alex Domash, and Lawrence H. Summers: The Fed is wrong: Lower inflation is unlikely without raising unemployment (August 1, 23022 11:15 AM)* Olivier Blanchard, Alex Domash, and Lawrence H. Summers: Bad news for the Fed from the Beveridge space (July 2022)Olivier Blanchard, Romain Duval, Pierre-Olivier Gourinchas, Anna Stansbury, and Betsey Stevenson: Labor Market Tightness in Advanced Economies (March 31, 2022 1:00 PM* Olivier Blanchard: Why I worry about inflation, interest rates, and unemployment (March 14, 2022 1:45 PM)+, of course:* Vernor Vinge: A Fire Upon the Deep <https://archive.org/details/fireupondeep00ving_0/mode/1up> Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe