UPDATE: Nope, I can't find the Niall Ferguson recantation of the 10%/year inflation claim. Can anybody help?
Paul Krugman writes:
Regions of Derpistan: Niall Ferguson declaring that we really do have inflation, but the feds are spiriting it away in their black helicopters and burying it in Area 51…
Didn't Niall Ferguson recant, and admit he was wrong--that we actually do not have inflation right now (and are unlikely to get any in the near future)?
Niall Ferguson, May 1, 2011:
The Great Inflation of the 2010s: Sticker Shock: The Fed may deny it, but Americans know that prices are rising. Inflation is back:
“I can’t eat an iPad.” This could go down in history as the line that launched the great inflation of the 2010s.
Back in March, the president of the New York Federal Reserve, William Dudley, was trying to explain to the citizens of Queens, N.Y., why they had no cause to worry about inflation. Dudley, a former chief economist at Goldman Sachs, put it this way: “Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful. You have to look at the prices of all things.” Quick as a flash came a voice from the audience: “I can’t eat an iPad.”
Dudley’s boss, Ben Bernanke, was more tactful in his first-ever press conference on Wednesday of last week. But he didn’t succeed in narrowing the gap between the Fed’s view of inflation and the public’s….
It points to the all-urban consumer price index (CPI-U) and notes that it was up only 2.7 percent in March relative to the same month a year earlier. Strip out the costs of food and energy, and “core CPI”—the Fed’s preferred measure—is just 1.2 percent. When Google unveils its new index of online prices, it’s likely to tell a similar story. To ordinary Americans, however, it’s not the online price of an iPad that matters; it’s prices of food on the shelf and gasoline at the pump. These, after all, are the costs they encounter most frequently. And with average gas prices hitting $3.88 a gallon last week, filling up is now twice as painful as when President Obama took office….
The CPI is losing credibility… [because] as economist John Williams tirelessly points out, it’s a bogus index. The way inflation is calculated by the Bureau of Labor Statistics has been “improved” 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent. Yes, folks, double-digit inflation is back. Pretty soon you’ll be able to figure out the real inflation rate just by moving the decimal point in the core CPI one place to the right….
I grew up in the 1970s…. I wrote my Ph.D. dissertation about German hyperinflation. So perhaps I’m also hypersensitive…. Maybe. Or maybe inflation expectations started shifting when the guy from Goldman—a Marie Antoinette for our times—seemed to say: let them eat iPads!