A Quote by Janet Yellen
Models used to describe and predict inflation commonly distinguish between changes in food and energy prices - which enter into total inflation - and movements in the prices of other goods and services - that is, core inflation.
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There is no such thing as agflation. Rising commodity prices, or increases in any prices, do not cause inflation. Inflation is what causes prices to rise. Of course, in market economies, prices for individual goods and services rise and fall based on changes in supply and demand, but it is only through inflation that prices rise in aggregate.
Because food and energy prices are volatile, it is often helpful to look at inflation excluding those two categories - known as core inflation - which is typically a better indicator of future overall inflation than recent readings of headline inflation.
If global oil prices or commodity prices are high, then it is bound to create inflation. So, we should not be too worried if the inflation is created by global commodity prices. When they come down, inflation will automatically come down.
What people today call inflation is not inflation, i.e., the increase in the quantity of money and money substitutes, but the general rise in commodity prices and wage rates which is the inevitable consequence of inflation.
The idea that when people see prices falling they will stop buying those cheaper goods or cheaper food does not make much sense. And aiming for 2 percent inflation every year means that after a decade prices are more than 25 percent higher and the price level doubles every generation. That is not price stability, yet they call it price stability. I just do not understand central banks wanting a little inflation.
Since World War II, inflation - the apparently inexorable rise in the prices of goods and services - has been the bane of central bankers.
A crucial responsibility of any central bank is to control inflation, the average rate of increase in the prices of a broad group of goods and services.
When they say inflation is bad, deflation is good, what they mean is, more money for us 1% is good; we're all for asset price inflation, we're all for housing prices going up, and we're all for our stock and bonds prices going up. We're just against you workers getting more income.
I would be uncomfortable raising the federal funds rate if readings on wage growth, core consumer prices, and other indicators of underlying inflation pressures were to weaken, if market-based measures of inflation compensation were to fall appreciably further, or if survey-based measures were to begin to decline noticeably.
It’s hard to build models of inflation that don't lead to a multiverse. It’s not impossible, so I think there’s still certainly research that needs to be done. But most models of inflation do lead to a multiverse, and evidence for inflation will be pushing us in the direction of taking [the idea of a] multiverse seriously.
No politician can praise unemployment or inflation, and there is no way of combining high employment with stable prices that does not involve some control of income and prices. Otherwise the struggle for more consumption and more income to sustain it-a struggle that modern corporations, modern unions and modern democracy all facilitate and encourage-will drive up prices. Only heavy unemployment will then temper this upward thrust. Not many wish to confront the truth that the modern economy gives a choice only between inflation, unemployment, or controls.
In reality, while currency movements can have a significant impact on inflation in other countries, dollar movements have rarely had a meaningful or durable impact on prices in the U.S.
Businesses that have gone through an episode of hyperinflation become understandably alert to the threat of it: at the first hint of inflation, they're likely to increase prices, since they've learned that if they don't, and inflation hits, their businesses will be wrecked.
The unique aspect of today's monetary inflation is that it is not limited to one country, but a host of countries are all inflating together. As a result of the monetary inflation (when all of the newly created money begins to leave the banks and enter the system), the price inflation will be worldwide.
Food and energy account for a significant portion of household budgets, so the Federal Reserve's inflation objective is defined in terms of the overall change in consumer prices.
Government policies try to prevent the emergence of serious unemployment by credit expansion, i.e., inflation. The outcome was rising prices, renewed demands for higher wages and reiterated credit expansion; in short, protracted inflation.
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