John Williams (Shadow Government Statistics) convincingly argues that the government cooks the numbers to the point where they are almost meaningless (e.g. deletes food and energy costs from the CPI used to index Social Security payments -- but diligently includes housing costs sans property taxes and vacation expenses). He also maintains inflation is currently running at a 5 to 10 percent rate (retail vs. wholesale prices).
Many other economists now predict that inflation will break hard. The consensus estimate on timing seems to be sometime during the second half of 2011 to the first half of 2012, although some believe we could be paying for our sins as early as the 4th quarter of this year.
As an economist, what say you?
My own feeling is that deflation seems more likely for the next 12 months than inflation. Inflation implies a situation where demand exceeds supply, thus pulling up prices. I don't see that. Both business and consumers are sitting on their cash waiting to see what those idiots in Washington do next. The uncertainty about taxes and spending is forcing consumers to the sidelines. Until Washington takes a clear, long-run solution to cut taxes to both business and consumers, I see deflation more than inflation.
Finally, to those idiots in the MSM who say: "How can you even consider a tax cut in the face of such massive deficits?" they clearly have not done their homework. Look at the tax receipts after the Kennedy and Reagan tax cuts. Also, the Laffer Curve gives a theoretical explanation of the way consumers think. Until Washington gets into and passes Econ 101, especially Obama, I see no hope. Gees...a fin-reg bill of 2700 pages that doesn't even look at Freddie and Fannie?? Unbelievable!!
Mixed bag. Food is inflating, prices the same but content is getting smaller. Fuel is inflating, should be much lower due to low demands but weak dollar is keeping the prices up. Housing and large items are deflating, because no one has the money to buy. Overall feds are trying to inflate while capacity and demand is deflating. Both forces may be cancelling each other out. Thus feds will double the effort by QE. Problem is when inflation ignites with all this cheap money it will take off before the feds have a chance to snuff it out. Can we say interest rates in double digits??!!!!
He's a joke.
(e.g. deletes food and energy costs from the CPI used to index Social Security payments
Since they don't index Social Security with CPI, your claim is meaningless.
He also maintains inflation is currently running at a 5 to 10 percent rate (retail vs. wholesale prices).
He makes lots of silly claims.