Double-Digit Inflation Bet With Bob Murphy
By Bryan Caplan
I’m a sucker for a good Simpsons reference. Here’s a great one from Bob Murphy:
It may smack of paranoid conspiracy theories to some readers, but as
the principal in the Simpsons said when the students overheard him
predicting that they had no future, “Prove me wrong kids, prove me
Bob Murphy makes several predictions, but his allusion to double-digit price inflation caught my eye:
[I]f indeed key players had wanted to create a North American Union with
a common currency, up till now they would have faced an insurmountable
barrier: the American public would never have agreed to turn in their
dollars in exchange for a new currency issued by a supranational
organization. The situation will be different when the U.S. public
endures double-digit price inflation, even as the economy still suffers
from the worst unemployment since the Great Depression.
This passage inspired me to challenge Bob to a bet, and he’s amenable. Here are the terms we worked out:
At any point between now and January 2016, if there is a year/year
increase in seasonally adjusted CPI that is at least 10%, then you pay me at that time $100.
If we get to January 2016, and there has not been any 12-month
stretch in which the above happened, then I pay you $100 at that time.
I officially accept this bet. Once Bob accepts in the comments, we’re on.
P.S. Just one more year till I win my Euro bet with Jeremy Rabkin.
Update: Bob accepts in the comments, then adds:
Bryan, can you either update in your post, or confirm down here in the
comments, that we are talking about CPI for all urban consumers, all
items. In other words, this is old-school CPI, not “core” CPI (which
excludes food and energy). And we’re not doing anything fancy like
looking at the middle 80% or whatever the newfangled techniques are.
OK, Bob. Old-school works for me!