EJ Antoni<\/a>\/Heritage presents this picture which should scare the beejeebus out of us.<\/p>\n Source:<\/strong> EJ Antoni\/X<\/a>.<\/em><\/p>\n I can imagine Secretary Yellen trying to \u201cstrongarm\u201d Russians trying to evade sanctions. I can imagine Secretary Yellen strongarming tax evaders. I must confess I can\u2019t imagine Yellen \u201cstrongarming\u201d Jerome Powell. I\u2019d like to know where Dr. Antoni has received information in this regard.<\/p>\n In any case, I thought the picture was a bit off, so I maximized the correlation, so as to replicate the peaks and troughs of inflation. The magic number was 47.5 years.<\/p>\n Figure 1:<\/strong> Year-on-Year CPI inflation (blue), and lagged 47.5 years (tan), both in %. Source: BLS via FRED, author\u2019s calculations.<\/em><\/p>\n This seems to suggest that inflation reared its ugly head again in 1979 because of a premature loosening of monetary policy. While this might\u2019ve contributed to accelerating inflation in 1979, I suspect one might want to take into account commodity price shocks in 1978 and 1979, the largest of which was oil\u2026<\/p>\n Figure 1:<\/strong> Year-on-Year growth in oil prices (WTI) (blue), and lagged 47.5 years (tan), both in %. Source: EIA via FRED, author\u2019s calculations.<\/em><\/p>\n So, sure, if one expects oil prices to jump 160%or so in 2027, then expect another surge in CPI inflation\u2026(although as Blanchard and Gali (2009)<\/a> have noted, the sensitivity of output and inflation to oil shocks is less pronounced than in the 1970s and 1980s).<\/p>\n \u00a0<\/p>\n<\/p><\/div>\n![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/09\/antoni_pix.png\")
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