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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Inflation expectations

Posted by WARREN MOSLER on March 16th, 2012

Seems all those hyper inflation forecasts haven’t had all that much influence.

;)

Cleveland Fed Estimates of Inflation Expectations

The Federal Reserve Bank of Cleveland reports that its latest estimate of 10-year expected inflation is 1.38 percent. In other words, the public currently expects the inflation rate to be less than 2 percent on average over the next decade.

12 Responses to “Inflation expectations”

  1. Paul Palmer Says:

    And I’ve been hearing since the 1970′s how our deficits were going to kill us.

    Reply

  2. Monica Smith Says:

    Could somebody explain how come inflated real estate sales didn’t register as inflation? In my neighborhood, people bought less than half acre lots for $650,000. The houses they had built cost $150,000 in labor and then got sold for a million until the collapse. Now those lots are assessed by the public appraiser at $115,000 and the properties are selling at a more realistic $350,000–realistic in the sense that 50 year old houses on similar sized lots, which went for $100,000 ten years before were going for $350,000 at the height of the bubble. Does real estate speculation simply not count in the calculus of inflation?

    Reply

    WARREN MOSLER Reply:

    owner equiv rent is in cpi

    Reply

    Monica Smith Reply:

    @WARREN MOSLER, I guess that explains it. Most of these houses were never lived in for most of the year, if at all.

    Reply

    Ivan Reply:

    Owner equivalent rent (OER) is also an interesting calculation. It makes up a large percentage of CPI. The BLS assumes that landlords pay utilities. When energy prices go higher (and rental rates remain unchanged), OER actually declines.

    Reply

    WARREN MOSLER Reply:

    that’s to avoid double counting as energy is already in cpi

    Reply

    Ivan Reply:

    It is in theory. Unfortunately, the Fed prefers core CPI which excludes energy. Also, a very high percentage of landlords don’t pick up utilities. Thus, Core CPI is understated when energy prices are rising.

    WARREN MOSLER Reply:

    yes

  3. Dave Begotka Says:

    When you make $200 a week and gas triples and meat doubles its hyper inflation

    Reply

    WARREN MOSLER Reply:

    you can define things as you wish but easier to communicate when people share definitions

    Reply

    Dave Begotka Reply:

    @WARREN MOSLER,

    sorry warren

    it seems our definitions of reality differ too……lol

    bikes are faster than cars……..

    Reply

    WARREN MOSLER Reply:

    yes, some bikes are faster than some cars…

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