This is CBS, I on the World. I'm John Batchel. I welcome John Cochran.

An esteem scholar and fellow at the Hoover Institution, who keeps the blog, substack, grumpy economist.

He is not grumpy. He's very sunny. And right now he's taken on the role of Sherlock Holmes.

And the mystery to be solved is inflation, the inflation of 2001 to 2024, that it's still

burdening everyone's thoughts about, are we out of it, have we recovered? What drives that inflation?

Where did it come from? Why did it not

follow the expectation that a recession would follow? These mysteries to be solved by Sherlock

Holmes. Remember how Holmes works. You eliminate the impossible. And whatever is left, no matter

how improbable, that's the guilty party.

John, a very good evening to you.

I beg pardon for making your Sherlock Holmes.

It's just a favorite of mine, and you set this up so there is a pursuit of the facts.

The inflation of 21-24.

Did it comport with the theories of how inflation work, or was it exceptional? Good

evening to you. Good evening. Yes, I think it did. I would add to your Sherlock Holmes motto,

embrace the obvious, which is what happened in this case. Now, it's interesting that there's such a reluctance to do that, but we'll get to that later.

The most obvious story for inflation has happened over and over again in the U.S., and that is what happens in wartime.

In a war, the government faces an emergency, spends like crazy without worrying too much about the efficiency or how we're going to pay the money back.

The Federal Reserve buys a lot of debt, monetizes the debt, holds interest rates down to help the government do the war, and inflation breaks out, which isn't necessarily not part of the plan,

because when you inflate, you inflate away the value of government bonds so that basically

it's like a default, and existing government bondholders pay for it rather than having to raise

taxes on people now or raise taxes

...