The big inflation mistake - the problem of a generation

The screen shot is from the always insightful substacks of Rudy Havenstein who always seem to have unique pulse on key investment and economic issues. I don't intend to get political but highlight issues that impact investing. The inflation shift was a regime change that has been impactful on all models and macro thinking. 

The quotes tell the story that policymakers completely missed the potential inflation problem both from a short-term and long-term perspective.  From a short-term perspective, they got it wrong with the transitory story. From a long-term perspective, they did not consider inflation a problem that impacts labor and consumer markets. 

Even with lower inflation, the price level is still high for many consumers. Prices are not going back to normal. "Beating" inflation from a policy perspective just slows it down. The purchasing power is gone, and the only hope is that wages will increase to make up for the purchasing power shortfall. At best, the hope is to stay even with the future and not make up for past shortfalls in purchasing power.