Opinion

The unkillable zombie of inflation paranoia

Why won't the irrational fear of inflation just die already?

Ever since the dawn of the financial crisis, which prompted the federal government to take extreme fiscal and monetary measures to prop up the economy, we have been dogged by inflation paranoiacs. They have been consistently and spectacularly wrong for the last six years, proclaiming in steady installments that hyperinflation is just around the corner, and yet they never change their tune.

What could explain this epidemic of zombie inflationistas? In a nutshell, it's class warfare.

Just go back to 2010, when Michael Kinsley wrote a piece for The Atlantic worrying that skyrocketing inflation was nigh. Since the article was an exercise in moralistic pearl clutching almost totally devoid of economic argumentation, it wasn’t a surprise that he turned out to be completely wrong; the dread inflation did not materialize. But that didn’t stop him from writing almost exactly the same piece again in 2012 for Bloomberg View.

Last week, we saw yet another uptick of inflation anxiety, despite the fact that the government reported that the economy had contracted in the first quarter.

The classic formula is to point to individual items that are increasing in price while blatantly ignoring the Labor Department's carefully constructed index. Even actual economists are, according to surveys, increasingly convinced that inflation is a threat.

As I’ve written before, this is not only incorrect, but an ethically dubious position to hold, given the awful reality of mass unemployment, the minor and arguably positive effects of a little inflation, and the strong tools in the Federal Reserve's arsenal to control inflation should it get too high. All inflation talk does is discourage proactive efforts to alleviate economic hardship.

Which is why we have to blame class influence for the enduring strength of the zombie movement. Wealthy people make up the vast bulk of nominal creditors, and inflation would work to erase the value of what is owed them. Those same people have a lot of influence in setting the terms of political discourse, from the mouth of Pete Peterson to the roundtable at Morning Joe, so much so that the government spent the worst years of the Great Recession obsessed with cutting the deficit instead of alleviating unemployment.

Many people, including Kinsley, may not even realize this is happening. But it's practically the only way to explain the otherwise baffling persistence of arguments that have been powerfully refuted time and time again.

I’m happy to keep writing these articles month after month, as the inflationistas come up with one bogus reason after another to keep stamping on the American worker. That effort is surely important, but there's more to it than that.

If class is to a large extent determining people’s position on the inflation question, then presenting evidence and logic will only get us so far. The hard truth is that we’re largely beyond the reach of evidence. The main goal at this point should be to simply keep inflationistas away from the levers of the economy. In that context, neglecting to even present nominees to the Federal Reserve Board for years at a time, for example, is an act of almost criminal negligence.

Because as long as class interests are at work, there will be massive cultural pressure to present some kind of argument to justify the position of nominal creditors. Therefore, it’s important to fight them both logically and via the structures of power.

(Correction: This article originally miscast the nature of a tweet by financial analyst Conor Sen. It has since been corrected. We regret the error.)

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