Columbia's Hubbard Says 'Average People May Be on to Something' on Inflation

Columbia University economist Glenn Hubbard, a former chairman of the Council of Economic Advisers under President George W. Bush, believes that average people may be onto something when it comes to inflation. While many economists have been focusing on the supply chain disruptions and energy price increases as primary drivers of inflation, Hubbard argues that the recent rise in inflation is not just a transitory phenomenon and that the Federal Reserve's monetary policy may have played a role in fueling it. He points to the fact that inflation has persisted longer than many economists expected and that it has become more widespread across the economy. Hubbard acknowledges that the Fed may have been too slow to raise interest rates, but he also emphasizes that the Fed's monetary policy is not the only factor contributing to inflation. He suggests that the government's fiscal policy, particularly the massive amount of spending during the pandemic, may have also contributed to the problem. Hubbard also notes that inflation is not just a U.S. phenomenon, but is happening globally, suggesting that it may be driven by factors beyond the control of any single country. He warns that the Fed's attempts to bring inflation down could lead to a recession, but argues that it is essential for the Fed to regain control of inflation, even if it means causing some economic pain in the short term.

Summary

"Hubbard concludes by saying that while there is no easy solution to the inflation problem, it is important to acknowledge that the Fed's monetary policy and the government's fiscal policy have both played a role in fueling inflation. He believes that the Fed must take steps to bring inflation down, even if it means causing some economic pain in the short term."