jakhammer
10mo ago
I’ll certainly agree with you in one place: Elon Musk, along with essentially everyone else expressing an opinion on inflation, has a lot of unearned confidence. Macroeconomics, and inflation specifically, is an area that brings out a lot of people fitting lines to past data and absolutely sure of causality. In reality, there is a wide range of opinions in macroeconomics on the relationship between fiscal and monetary theory and price levels, all held by PhDs genuinely trying to figure out what's going on. All those people in 2021 calling inflation “transitory” genuinely had thought hard about their predictions and genuinely were wrong. See Figure 1 here, where traders with money on the line completely missed their bets on CPI paths.
I’ll take a moment to share my personal hobby horse, John Cochrane’s fiscal theory of the price level. It predicts that inflation is caused when people expect the government to repay its debt by printing money in the future instead of responsibly running a fiscal surplus. Deficits in response to crisis are fine as long as you can credibly pay them back, but our recent government has shown absolutely no plans to do so. Regarding valid expertise, Cochrane pleasantly obliges by providing media anywhere from engaging (Podcasts! Sound effects!) to unintelligible without an econ degree (Calculus¡ Terrifying¡).
At least on this topic, I don’t think Musk is worse than anyone else. Everybody (including me) wants to say they have a handle of what causes inflation; we probably don’t, and will get to partake in the classic human experience of being completely wrong about the future of the macroeconomy.
I just got the game a week ago, been having a good time so far! Will DM you.
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