The right wing just can't believe that inflation is so low
by David Atkins
There are are two data sets that drive Republicans crazy: the inflation rate, and the yield on U.S. Treasuries. As I have noted before, insofar as it's possible to prove anything in economics, the proof of whether Republicans are right about debt and deficits lies in Treasuries and inflation.
If, as Republicans claim, stimulus and soft money policy lead inevitably to hyperinflation, then we should be seeing significant inflation. If, as Republicans claim, large deficits lead to distrust of U.S. debt, then the Treasuries market should be suffering. If neither of those are true, then Republicans are just dead wrong. So let's take a look at the numbers:
Here is the inflation rate:
1.5%. That's incredibly low. In fact, in a recessionary environment that's almost dangerously low.
So how are Treasuries doing? Until just last month when Republicans almost drove the United States into default, demand for treasuries was sky high. Treasuries have weakened very recently only because of world economic slowdown and, again, the darkly comic ineptitude with which Republicans threatened the full faith and credit of the United States.
The data continue to drive a sharp stick into the eyes of Republicans. It doesn't make sense to them and it overturns their world view.
So increasingly, rather than call into question their deeply held beliefs about deficits and stimulus, you see them relying on kooks who claim that the government is lying about the inflation rate, or illegally propping up Treasuries. Or you see them hilariously trying to tie Chained CPI to some evil Marxist plan to hyperinflate the dollar.
These people are just wrong, and economic reality is shoving how wrong they are in their faces at every moment. As the austerity crowd makes yet another push, we mustn't let them forget it.
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