Fears in U.S. Over Inflation Getting Out of Hand Fast!

Inflation in the United States has been on a rising trend in recent months with the Federal Reserve tolerating the surge in consumer prices with the hope that it would eventually lead to achieving the price stability target with a sustainable inflation rate of 2%.

However, despite the central bank’s new guidelines and framework, Fed officials have repeatedly said that high inflationary pressures are due to transitory or temporary factors, such as supply chain disruptions.

On Friday, economic historian Niall Ferguson reportedly told CNBC that the U.S. could see an inflation scenario similar to what happened in the late 1960s, which led to record inflation rates in the following years.

“What is interesting about disasters is that one can lead to another. You can go from a public health disaster to a fiscal, monetary, and potentially inflationary disaster.

“It is not such a big disaster, it doesn’t kill people, but an inflation liftoff would be a problem.”

Ferguson is doubting the Fed’s narrative over transitory high inflation, which has resulted from the large stimulus measures in a way similar to how the U.S. dealt with the Global Financial Crisis.

“My sense is that we are not heading for the 1970s but we could be rerunning the late 1960s, when famously the Fed chair then, McChesney Martin, lost control of inflation expectations.”

“The big inflations in history have nearly always been associated with war. The thing that really would de-anchor inflation expectations would be if this cold war between the United States and China escalated into a hot war, say, over Taiwan.”