said by Z80A:
A far more likely short term scenario is stagflation...high inflation with little to no economic growth.
That, I can agree with.
However, it's plain to see that energy and food prices are well off from their highs.
As far as certain items being excluded from the core inflation number, energy prices are so volatile, that it makes sense to exclude it from core inflation. Added back in to the long term trend, it makes more sense, but when comparing month to month or quarter to quarter, energy and food just muddy the waters.
In any event, however you calculate it, inflation is extremely low at the moment and yields on government debt is extremely low. The low inflation combined with the low federal funds rate tells us that deflation is a reasonable possibility. The low yield on government debt tells us that those buying the debt don't think hyperinflation is a likely scenario.
Interestingly, if you look at corporate balance sheets, you'll notice most companies are hoarding cash like mad right now. If that reverses, it might be time to consider tightening the money supply.--
It's wierdo, not weirdo. Yes, I know that's not the 'proper' spelling of the similar english language word.