Monday, February 8, 2010

The inflation moderation (in charts)

I got a little obsessed today with the prospects of inflation – I guess it’s all the deficit talk out there. But good central banking has brought the number of countries with 20%+ inflation rates from 27 in 1982 down to just 18 in 2008.

I guess my question is: is the global inflation moderation to continue? According to the IMF, the answer is yes (at least through 2011).

Rebecca Wilder


  1. I think the IMF are in for surprise!

    Inflation was low up to 2008 mainly because of uninhibited outsourcing pushing wages and the general cost of manufacture down.

    Right now inflation is still low, probably because capital is still being destroyed faster than the central banks can print it.

    But Later -

    A default in one of the PIGS, A trade war with China perhaps, The rise of right-wing nationalist, protectionist, governments all over Europe on anger over job-losses and bank-bailouts will throw grit in the machinery and we will see 1980's interest rates again on the uncertainty.

    Then inflation arrives as politicians will try to placate their restive voters (or get replaced by someone who will) so they will print to "create jobs" and make the debt worthless faster (but that is bad form, so it will never be said).


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