No surprise that we see another doomsday article from Mr Busler. Inflation-chicken-little.
We had serious deflation during the Great Depression. Prices went down but nobody had money to buy anything anyway. That's the problem with being on a gold standard and locking the growth of the money supply to gold which was getting pulled from one nation to be sent to another. We saw an increase in the inflation rate as we entered WW2 and then again as we exited the war effort. Both likely caused by runs on products and goods, the first because things were soon going to be unavailable due to war needs and after due to influx of people returning home with demand for goods.
As Mr Busler noted, inflation did soar in the late 1970s. See link below [1]. This was largely due to loose money policy of the Federal Reserve for which there was very little reason. Nixon bullied Fed Chair Burns to expand the money supply to lower unemployment. As some readers know, the Federal Reserve has a dual mandate: Keep a rein on inflation and encourage full employment. (As an aside, perhaps it is time to break this mandate in half. Under Modern Monetary Theory (MMT), the federal government should commit to a "guaranteed jobs program." If this were implemented, employment would become the purview of the Congress and Presidency and part of FISCAL policy, removing it from the Federal Reserve's focus on monetary policy. The Federal Reserve could then focus on inflation and other monetary metrics.
In any event, looking at the data table from link [1] shows inflation for the last ten years, even after the crash Obama inherited from GW Bush, never broke 4%. Indeed from January 2009 through December 2020 the overall average was 1.56%. The last three months have been 1.04, 1.7, 2.6 respectively.
We didn't have an inflation surge during the auto bailouts and TARP and other too small but necessary government interventions because that was a financial crisis. This is different. Some inflation will be expected. The pandemic squashed demand, thus low inflation to be sure. As pointed out, quite a few people have money they haven't spent and will soon begin spending. But there is still a key point missing. Very likely people's approach to daily life has changed. Even as more people get vaccinated, people won't be flooding into the marketplace as they used to. Habits have changed. Also, the businesses really hurt were service industry businesses like hotels, movie theaters and restaurants. People will begin spending there again. But for products and goods? Nothing really changed. Sure some people spent money on home improvement products during lockdowns. But people STILL bought groceries and other daily necessities. Gasoline will likely be one of the key products to see prices rise once people begin traveling again.
[1]
https://www.usinflationcalculator.com/inflation/historical-inflation-rates/
[2]
https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp
