That’s what Matt O’Brien declares:
You can see that above. Inflation is just 1.6 percent in China, 1.5 percent in the U.S., 1.2 percent in the U.K., and a minuscule 0.3 percent in the Eurozone. Then there’s Japan, which is harder to compare since its sales tax hike just bumped up prices, but would only have 1.1 percent inflation, if not for that. And it’s probably even lower than that there and everywhere else. That’s because, as Jessie Handbury, Tsutomo Watanabe, and David Weinstein show, measured inflation tends to overestimate actual inflation by about 0.6 percentage points. So inflation might really be about 1 percent in all of the world’s biggest economies.
Drum’s bottom line:
Nobody knows what will happen in the long term, but for now we simply shouldn’t be worrying about inflation. We should be worrying about growth and unemployment. Inflation just isn’t a problem.
But Amity Shlaes doesn’t regret her inflation fear-mongering:
[S]omeone in the world ought always to warn about the possibility of inflation. Even if what the Fed is doing is not inflationary, the arbitrary fashion in which our central bank responds to markets betrays a lack of concern about inflation. And that behavior by monetary authorities is enough to make markets expect inflation in future
The inflationistas got the balance of risk totally wrong — unemployment, while falling, has remained above target, while inflation has stayed below it. Shlaes’s defense is not just factually wrong, it’s conceptually bizarre. Somebody has to worry about bear attacks, yes. But if you demand that all children be kept home from school for the year to protect them against bear mauling, it’s not enough to point out that bears exist. You need to somehow engage with the idea of a tradeoff.
The ability of inflation derp to persist, even flourish, in an age of disinflation remains remarkable.