You can't have inflation everywhere, but you can have inflation somewhere, if a currency breaks down.
However, contra RatEx theory, you can have a widepspread anticipation of broad based inflation in conditions where broad based inflation are impossible if the anticipations are based on a simplistic model of inflation that is counter to available evidence, such as a Monetarism based on a minority subset of money, and that model predicts a broad based rather than currency specific inflation.
Question 2:
Oil overshot low, and much of the price increase is the recovery to a more sustainable long term supply price for current demand conditions. Some of the price increase may be actual hedge/speculative purchase, if (AFAIU) inventories are up. The prospective downside risk is modest, maybe 10% or 20%, and the prospective upside gain is massive, for either the oil price shock scenario or the currency break down scenario.
Question 3:
By lying. Abandoning mark to market is responsible for a healthy slice of reported bank profits. The question is, of course, whether there will be a strong enough recovery to turn a substantial portion of those present lies into future truths. I am dubious that there will be without policy changes. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Irrespective of whether inflation is feasible in the real world, financial markets are not time-telescopes. They do not read from the future, but only from present anticipations of the future. So if a flawed model is prevalent, it will show up as inflationary expectations.
IOW, when there's smoke, there's fire ... but sometimes its not smoke, its just a dust cloud. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
