I have a theory about the current low inflation but first a few other ideas.

Inflation is more, greater, than the reported headline numbers. I won’t say the CPI is being gamed but it does not reflect most people’s reality.

I don’t think a Macro view is meaningful to most people.

Inflation is lower than would be expected to the degree that if even stumps the central banks.

My theory is inflation is low because of the flood of goods available. To say this another way where consumers are well supplied inflation is low. Where goods supply is very elastic there is very little inflation and maybe even a degree in deflation as producers compete for market share and innovate to produce better products at the same or lower prices.

A few things are in short supply, urban housing and education at elite schools, that skew the inflation numbers but only for select groups of people and not the population in general. Since the influx of money from central banks does not seem to translate into wage increases, consumer demand can only grow if they are willing to take on more debt. With consumer debt being high, they don’t seem to be interested in more debt.

Another thing that is dampening demand is lower population growth.

If you want to increase inflation you need to stimulate demand and cut production. You have to give money to consumers not producers. The idea that giving/loaning money to producers would cause them to hire more workers or pay the workers better did not work out as planned.

TEK