December 31, 2009

WORRIES ABOUT INFLATION.

“We have the most potentially inflationary policy I have ever observed in a developed country,” said Alan Meltzer, a Fed historian and professor of political economy at the Carnegie Mellon Tepper School of Business in Pittsburgh.

According to widely used economic models, the way consumers perceive the prospect of future inflation has clear implications for prices themselves. Once higher costs are taken for granted, they are more easily tolerated.

Several indicators are already hinting at that possibility.

I’m investing in polyester leisure suits. It’s the one thing from the 1970s that hasn’t started its comeback yet . . . .