Wednesday, April 07, 2010

The Course of Inflation

The short-term case for inflation remains speculative, however the long-term trajectory for inflation appears to be on a glide path toward 5% or so per annum (assuming gold prices proxy inflation). Most economists would consider this level of inflationary pressure to be too high for stable economic growth. Nevertheless, inflation does not appear to be on the verge of overtaking the economy as some are suggesting, though fundamental indicators may tell a different story. If anything, gold prices appear likely to decline from current levels in the coming years. I suppose only time will tell...

Source: Data from MeasuringWorth.com

Related Posts:

The Course of Inflation II

The Course of Inflation III

2 comments:

Max J. Pucher said...

William, as much as I enjoy our exchanges but I need to push my finger into the wound. Given our discussions about the ability to sensibly predict risk, I would ask you now to not wait for time to tell, but to calculate what risks are associated with inflation. Thanks.

Dr William J McKibbin said...

Max, I was wondering if anyone might ask -- more to follow...

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