Daily-Dose

Contents

From New Yorker

From Vox

  1. December 10, 2021

Surging inflation doesn’t mean bad economic news across the board, either. As Claudia Sahm, a former Federal Reserve economist and senior fellow at the Jain Family Institute, told Vox in November:

Both because jobs have been coming back and also because the federal government put out a lot of economic relief, people — especially those who are at the very top of the heap — have, on average, enough money to pay those extra prices in the majority of cases.

Still, while inflation numbers aren’t the only measure of economic health, the reality is that inflation is high after decades of hovering around 2 percent. That, as Sahm said, is a “pain point” as the economy recovers from the Covid-19 pandemic, and it’s one that people notice because they interact with every day at the gas pump and the grocery store. But while the current numbers are higher than Fed targets, it’s nowhere near the level seen during the so-called Great Inflation, when consumer prices shot up more than 14 percent.

Some worry Biden’s not doing enough to fight inflation

Nevertheless, some influential voices, including Summers, have raised the alarm about long- term inflation problems and pointed to government spending as a driver of inflationary woes.

In a February Washington Post op-ed, Summers wrote that “there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”

In the same piece, Summers accused the administration of denying “even the possibility of inflation,” raising concerns that Biden wasn’t adequately prepared for the rise in prices that coincided with sweeping stimulus packages, and didn’t have the proper measures in place to act quickly to bring inflation down.

That concern — that the administration wouldn’t act quickly and that inflation would become a longer-term problem, rather than the transitory issue Biden predicted — is playing out, at least somewhat. So far, as November’s numbers show, inflation isn’t letting up.

While the US has spent trillions in pandemic relief, however, inflation is also occurring elsewhere in the world, where governments have taken different approaches to dealing with the fallout from the pandemic — suggesting that government spending doesn’t tell the whole story.

What is the government doing to contain inflation? What can it do?

While the Biden administration is doing what it can to fix supply chain issues and drive down rising gas prices, most of tools to address inflation are in the hands of the Federal Reserve.

“I don’t think [inflation] is changing very much any time soon,” Jason Furman, the former chair of the White House Council of Economic Advisers, told MSNBC Friday. “I don’t think there’s a whole lot the White House can do about it, but for the Federal Reserve, a better economy and higher inflation both tell them they need to continue to pivot to get this under control.”

One way the Fed plans to cool the economy is “tapering” — gradually decreasing the $120 billion it spends per month on government-backed bonds, which has injected money into the financial markets during the pandemic. In November, Fed Chair Jerome Powell announced the central bank would reduce that amount by $15 billion each month. The purchasing program is supposed to end halfway through 2022, but as the New York Times reported in early December, that program could finish more quickly as the Fed attempts to reduce inflation.

“At this point, the economy is very strong, and inflationary pressures are high,” Powell said in late November. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at our November meeting, perhaps a few months sooner.”

Along with that could also come interest rate hikes, although the Fed has not announced specific plans to do so. Interest rate increases are a powerful tool in the Fed’s arsenal to slow down consumer spending, and thus inflation. And, as inflation continues to rise, that’s looking like a more likely tack for Powell to take, once the Fed’s satisfied that the economy has reached “maximum employment” — a signal that the economy is healthy enough to withstand the withdrawal of government support.

Summers, though, sounded the alarm to Bloomberg on Friday, saying that the Fed would also need to increase interest rates — the amount that a lender charges a borrower for a loan or credit — repeatedly next year to help keep inflation in check.

“We’ve put in motion, for the first time in 40 years, excessive inflation caused by overheating of the economy,” he said, warning that the government had driven up inflation “way above 2 percent — perhaps in the 4 percent or even higher range,” and that could be permanent.

Beyond monetary policy, though, the other massive piece of the puzzle is the supply chain — and that’s something politicians and policymakers have much less control over. Biden has attempted to ease supply chain woes by running the Port of Los Angeles 24 hours a day, clearing the docks so goods don’t wait for days on cargo ships stranded in the water. And the release of 50 million barrels of oil from the US Strategic Petroleum Reserve last month was geared toward reducing gas prices, which have already begun to fall.

Most likely, however, the supply chain will remain snarled for the foreseeable future — keeping inflation higher than we’re used to — and policymakers will have to react to that reality.

I also kept using perfume, even after my incident with Musc Invisible. At first it was a source of anxiety — would I be able to smell the next vial? Was White Castitas — a sample from the June box with notes of lemon, sandalwood, and licorice — just very subtle, or was I still missing some crucial licorice sensors deep inside my nose?

Over time, though, those worries have faded. I’ve come to accept that my sense of smell is different now, that what’s still gone may never be coming back, and that I’ll probably never know if I’m back to “normal.”

For researchers like Reed, the prevalence of Covid-induced anosmia is a wake-up call that science and medicine need to take the sense of smell more seriously. She and her colleagues advocate for testing of taste and smell the same way we test for hearing and vision, and are at work on a new test to help doctors evaluate a patient’s sense of smell quickly and easily.

For Waters, the pandemic is a reminder to embrace our sense of smell while we have it. “Continue keeping your nose open,” she said. “We can’t take our ability to smell for granted.”

And for me, regaining smell is just another small way that I’m emerging, marked, from the last 20 months into whatever comes next.

I tried smelling Musc Invisible again as I was writing this story. I could definitely detect something: a kind of chemical sweetness, like bubblegum mixed with hydrogen peroxide. I don’t know if it’s the perfume itself or my still-wonky sustentacular cells, but I don’t care anymore. This perfume smells bad to me now. I’m going to throw it away.

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