The Wall Street Journal :The Return of Stagflation– Ronald McKinnon

The Wall Street Journal Op Ed Sees Dead People High Inflation  - Same as Seeing Dead People

In an editorial page comment Tuesday in the Wall Street Journal Ronald McKinnon of the Stanford Institution for Economic Policy Research announced that the U.S. was entering the summer with stagflation, a period of high inflation and high unemployment. Now The Dismal Political Economist has long been familiar with the partisan and biased spin of the editorial pages of the Journal, but it is somewhat rare for an out and out fabrication (ok, not so rare).

Half of Mr. McKinnon’s statement is true, there is unacceptably high unemployment.  But inflation by any measure is just not high in the U. S. at this time.  It is high in much of the rest of the world, but not here, not yet.

One the most fascinating piece of analysis in this article is that the inflation that is not present in the U. S. but is present in the rest of the world is the fault of the U. S. Federal Reserve.  That’s right, Federal Reserve policy has not caused inflation in the U.S. where it affects policy the strongest, but it has caused inflation in the rest of the world, you know, countries thousands of miles away from the U. S.  In fact given that inflation is generally higher the further one moves from the U. S. it seems that according to Mr. McKinnon the further one’s country is from America, the greater the impact of Federal Reserve policy.

Who would have known?