Joe Blow doesn't really think about inflation when he's borrowing for a house.

Of course he does. He thinks house prices are going to go up. They always go up, don't they? If he didn't, then he wouldn't buy.

Drew J Jones:

People have inflation expectations, but Joe's only thinking, "Man, meat and cereal are costing me a lot more these days."  He thinks that will continue to be the case, watching the news.

But IMHO he asks for his wages to go up to restore the status quo ante. Not to pre-empt inflation.

I doubt whether inflationary expectations play much, if any, sort of role in Joe's thinking - unless he's an economist....


"The future is already here -- it's just not very evenly distributed" William Gibson