Isabella Weber On a New Way to Think About Inflation

Odd Lots

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🗓️ 19 January 2023

⏱️ 43 minutes

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Summary

In economics, there tends to be two dominant ways of thinking about inflation. Either you agree with Milton Friedman, who described inflation as always and everywhere a monetary phenomenon (the result of too much money printing). Or you're more of a New Keynesian who thinks that higher prices are all about the relationship between demand and capacity. In a new paper inspired by Odd Lots and the series of disruptions that have rocked the economy since the global pandemic, UMass Amherst Economics Professor Isabella Weber describes a potential third way of thinking about inflation. She identifies systemically significant sources of inflation, or industries that could end up having a broader impact on a wide variety of prices. The hope is that by identifying these important sources of inflation early, policymakers can put in place measures to make sure price increases don't get out of hand.

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0:00.0	Do you know what your interest rate is on your savings account?
0:02.7	I bet it's lower than you think.
0:04.4	Go ahead and look.
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0:09.2	As of 9-1-2023, you could earn an annualized 5.5% yield with T-bills when held to maturity.
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