David Wessel:
Right.
So people like Larry Summers, Larry Fink, who’s the head of BlackRock, a big Wall Street you remember firm, the folks at Bridgewater, a hedge fund, they are all saying essentially that the Fed is too complacent, that while some of this is temporary, they’re worried that some of it is not temporary, that housing prices are going to continue to rise because demand exceeds supply, that wages are starting to go up.
And they’re afraid the Fed will wait too long to raise interest rates and repeat the mistakes they made in the 1970s, when they let inflation get out of control. On the other hand, other people look at a different historical period and said, this is something like the end of World War II.
There is a lot of disruption because we have come back from the pandemic, and they expect this to decline. One really important thing is what economists call inflation expectations. If financial markets in particular begin to build in expectations then that we are going to see much faster inflation, that could lead to a self-fulfilling problem.
