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|User Info||2021: The Year In Review, And A Wee Light In The Tunnel; entered at 2021-12-28 06:23:35|
Inflation won't be hyper in the wheelbarrows sense, but I expect it will be worse in 2022. I was discussing this with someone over the weekend and mentioned that a $6 Big Mac Value Meal would cost about $37 after 20 years of 10% inflation per year. If, on the other hand, inflation starts at 10% per year and increases by 10% per year (ie, 11% in year 2, 12.1% in year 3), then the same benchmark would be $500 in 20 years... yet for a number of years, the differences between the two would seem minor (eg, in 5 years it'd be $8.78 or $9.31).|
The Dec. FOMC delivered what I expected--no meaningful action, but promises to get tough in 2022. I expect minimal action in 2022, maybe targeting 0.25% for the discount rate sometime before March to provide an impression of seriousness, but nothing meaningful.