Since 1995, durable goods (cars, televisions, computers and the like) have been getting cheaper in the U.S. That’s even as the prices of services and nondurables have mostly kept rising.
Read the whole post. Pointer from Mark Thoma.
At one point, Fox recycles the often-told tale of Fed Chairman Paul Volcker vanquishing inflation. My alternative view is that bond market vigilantes took over. That is, lenders got tired of generously offering borrowers negative real interest rates.
Things-cheap/people-expensive seems to be a recurring economic mantra of our times.
Doesn’t seem to be stopping anytime soon either. That article reminds me of this video:
https://www.youtube.com/watch?v=7Pq-S557XQU
I almost wonder if the modern if the global stagnant (or falling) developed world demographics are driving the lack of inflation today. How can you have increased AD curve if there are less consumers and most people to spend less after 45 – 50. (The AS decreases ten years later.) Looking at Japan economy the last 25 years, I had an Economy Professor in 1993 state they would become stagnant because the most important economic system input was going to decrease. That was the smartest thing my college professors said. (Also it might way to explain 1970s inflation in which the baby Boomers were setting up households and consumer more.)