There’s a confusing argument about inflation playing out in The Discourse surrounding the passage of the American Rescue Plan. I wanted to give my view on it, but also try to clarify what it is exactly that we are arguing about.

After all, in the most recent Consumer Price Index release, prices were up 1.4% over the past 12 months. That’s below the Fed’s 2% inflation target. And the Fed has announced its intention to switch to a framework that implies it should make up for sub-target inflation by going above-target.

So I think it is a hundred percent reasonable to believe that we will see a higher rate of inflation in the future. But, there’s a huge difference between saying “inflation is coming!” as a dark scary warning and just observing that current inflation is way below the stated target, so future inflation will probably be higher.

I’m concerned right now both that inflation-fearmongering could generate bad policy, and also that inflation fearmongers may claim vindication if, in …