In my post on the CPI numbers from one month ago, I argued that the data on inflation was better than most news reports suggested. When inflation is falling, the average rate over the last 12 months – the type of measure that government officials and news reports tend to emphasize – give us an indication of the current rate of inflation that is biased upward.

When I wrote last month, I said that it is not hard to imagine that the fight against inflation could be over soon. The data for December provide additional support for this optimistic assessment, but they do bring into sharper focus the question of when we should declare victory. What should the new target rate of inflation be?

If you are worried that the decision today by the Fed to increase rates by only 50 basis points is a sign that it is giving up on the fight against inflation too soon, you may not realize how good was the news that we received yesterday about the current rate of inflation.

The reason you might have missed this good news is that most discussions of the data focus on an average inflation rate observed over several months. Averaging has the advantage that it filters out noise but the disadvantage that it can hide news about a change in the underlying trend.

One of the side-stories in the FTX saga is the fawning portrait of Sam Bankman-Fried (SBF) that Sequoia Capital published less than 2 months before the collapse of his financial empire. The part that has already raised eyebrows comes toward the end: After my interview with SBF, I was convinced: I was talking to a future trillionaire. Whatever mojo he worked on the partners at Sequoia—who fell for him after one Zoom—had worked on me, too.

I learned everything I needed to know to understand the crypto-crisis (and the great financial crisis) from the Savings and Loan crisis of the 1980s. For those too young to remember, I suppose it might be useful to resurface the paper that George Akerlof and I wrote three decades ago: Looting: The Economic Underworld of Bankruptcy for Profit.

The shared behavior of inflation in the OECD countries suggests that they are all coping with a common price shock exacerbated by the the war in Ukraine. For decades, the big difference between the US and its peers is that the US has failed to maintain a high employment rate. The hidden success of US policy during the last two years is that wages for those most likely to leave work have been growing faster than wages for other workers. This trend may need to be sustained for a long time to get the employment rate back to where it was before the pandemic hit; even longer for employment in the US to catch up with its peers.