Inflation has risen in the US, the UK, the Euro Area and elsewhere, as demand has increased following the opening up of the economy after pandemic-induced lockdowns, and supply chains have been disrupted.
This has produced a debate amongst the economic commentariat about whether they are on ‘team transitory’ [the rise in inflation will be temporary] or ‘team permanent’ [you get the idea]. Participants have been updating their guesses about which team will win, as each inflation print is released.
The debate does not really make much sense. It is very difficult to justify being on ‘team permanent’. There are not many circumstances whereby the rise in inflation could become permanent and they they require extreme and counterfactual views to take them seriously.
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