Dude, Where’s My Inflation?
by Kristoffer Mousten Hansen
From time to time, Austrian economists, goldbugs, and other economists on the saner end of the spectrum warn of the inflationary dangers of modern central bank policies. The most famous case of this was Bob Murphy’s bet with David Henderson that the Federal Reserve’s policies after the financial crisis of 2008 would result in high, i.e., double digit inflation. Unfortunately for Murphy, he lost this bet, and, more generally, the much-dreaded (or in the case of central banks, much-hoped-for) inflation has so far failed to materialize. This is true both when one looks at the official inflation measures and even when one consults alternatives such as shadowstats. What explains this apparent failure of Austrian commentators?
The Basics
In order to underst...