This is the Cato Daily Podcast for Wednesday, October 20th, 2021.

I'm Caleb Brown.

Fewer and fewer economists are describing the inflation now present in our economy as

transitory, as many more economists are now

predicting inflation will be with us for a longer term.

Norber Michelle is the brand new director of the Cato Institute's Center for

monetary and financial alternatives. new director of the Cato Institute's Center for Monetary and Financial Alternatives.

We discussed how the Federal Reserve and Congress ought to respond.

You know if you watch Bloomberg, which I watch probably too much of, you would see even late last week investors saying,

well, yes, this inflation is still transitory, but by transitory what I mean is it will be with us for the next 18 months.

And so I wonder what that means and so when you look at what we're seeing with respect to inflation,

I think a lot of people would have expected, well of course we're going to see inflation

with this massive spending spree and yet we have years of data that says,

nope, we've seen massive increases in spending before and we haven't seen inflation show up in consumer prices.

Can you talk about that a little bit?

Yeah, no, it's exactly right.

We have witnessed a lot of people recently talking about all this money

creation and how that's going to give us inflation but you have data we have data

going back not just in the United States and other countries, but particularly in the US,

all the way back to the 80s, got a very loose poor correlation between just the monetary

aggregate and inflation. If anything over the last 30-40 plus years

the Central Banks of the world, the FEG included, have been struggling to hit an inflation target.

...