Inflation is coming.
Ha-ha! You don’t believe me, do you? I can hardly blame you. Economists used to talk about prices as if they were barely domesticated animals: loosen the tether, and they will will take off on you. Those economists now look like fools. As central banks dropped interest rates to zero to fight the Great Recession, the True Believers warned of apocalyptic spikes in sticker prices.
It never happened. Inflation has been a non-story for years. In fact, the central bankers have tended to worry that prices could head in the opposition direction. In October, 2016, Carolyn Wilkins, senior deputy governor at the Bank of Canada, told an audience in Trois Rivieres, Quebec, that “risks to the profile for inflation have tilted somewhat to the downside.” Forgive her the slip into jargon. It was actually a foreboding statement. What she meant was that because the economy was so weak, the central bank was worried prices might actually start to decline. In other words, disinflation, which is the slippery slope on which economies slide into that most pernicious of conditions: deflation.
But listen to Wilkins now.
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