Who's afraid of spiders? Arachnophobia is widespread. Astronaut Chris Hadfield explains, statistics in hand, that there is no reason to be afraid (almost an oxymoron, fear being irrational).
La fear of inflation looks like to arachnophobia. There is no reason today to fear a restart of the price race. The Lancet they even wish for it, because it would take many chestnuts out of the fire: it would remove the abyss of deflation, it would push people to spend, it would be an indication that the economy is out of the swamp of secular stagnation, it would lighten the burden of debts, it would make the task easier for the Central Banks… But, far from reaching this hope, many are wondering about the possibility that inflation will pick up again, and they fear it, thinking that this will cause interest rates to rise again (remain calm and read the piece on rates and currencies).
Why won't inflation pick up again? Simple, because the prime mover of a price run-up is the cost of the job. Cost that now and in the foreseeable future will be immobile (as in the Aristotelian system). It would take a Copernican revolution to start seeing it rise. Above all, it would be necessary for the labor factor to become scarce, much scarcer than it is today.
Instead, full employment has been moved away from pandemic crisis not only because it has brought down GDP and jobs, but also because has accelerated the changes taking place and it will take quite some time for these changes to settle in, if at all.
The changes are technological but also social and cultural. Both are creating enormous competitive pressure that is holding back the desire to increase price lists. The Online shopping they are increasingly simple and frequented by people. Just a couple of touch on mobile phones, where profiled advertising already offers the object of desire. And then the giants of logistics and home deliveries take care of it, without naming names so as not to hurt anyone (the grocery turnover of the first US commercial chain fears no competitors thanks to the increase in internet sales).
With the "talking" refrigerator we will be able to manage the expenditure better: he will do it himself (once there was only the wise cricket of Pinocchio, but it ended badly). With industrial machines talking maintenance costs will be reduced. With the 5G it will even be possible to perform surgical operations remotely. With smart working we will no longer have to rush out of town for the weekend, with significant savings for both workers and employers (less dedicated office space, for example).
Will all of this make inflation go up or down? To you the arduous sentence.
We mere mortals just have to observe that i commodity prices they rise and this increases the producers' income and therefore their investments. In economics they are called price-relative movements.
At one time the prices of the commodities followed a decreasing trend. So much so that the very name of these primary goods has become synonymous with easy to find and worthless. It is too early to say that this trend has broken. Also because the fight against climate change (Anglo-Saxon sweetening of the destruction of the planet) will require us to reduce the consumption of these goods and invent new, less impactful living standards, such as the use of meat - non-meat.
But this Christmas let's still enjoy the stuffed capon. Or is fish better? Abundance problems to be resolved according to family traditions.
