People yell a lot about inflation and its potential harm to the economy, but if you’re screaming about food or energy inflation in the US you don’t have a clue about what it can really do.
Where inflation stings is in places like Indonesia, India, and Bangladesh, where rampant inflation and a stock market crash have lead to riots.
For some perspective, here’s what the Dhaka Stock Exchange has done in recent weeks. Obviously ugly.
To even talk about the US experiencing inflation in anywhere near the same ballpark as what’s going in in the emerging world is a joke. Yes, it sucks to pay $3/gallon in gasoline, or pay more for a box of cereal, but this sort of inflation is not going to lead to riots or abandoned vehicles or crater the US market.
Bernanke is happy to tolerate a bit of commodity inflation to fight off deflation in wages and housing. (Whether he succeeds is another story.)