The inflation monster has been nowhere to be seen in the US for obvious reasons.

The broadest measure of US inflation is probably the GDP Price Deflator.

http://research.stlo...F&log_scales=Left (slopes in log scales better show changes over time)

The index was 100 in 2005. It's now 116.1. That's less than 2% a year.

Why is inflation not a problem now?

1) Unemployment is too high.

2) Companies cannot pass on increased prices because there is too much slack in the economy. (Capacity utilization is too low.)

3) Money is too cheap - companies can borrow or issue stock or put up stock as collateral.

4) New household formation rates are very low (too many people are living in friends' basements and back home with their parents, so housing demand is low).

5) Too many people are worried about getting their principal back if they put it in a bond or in a bank. They're willing to pay the US Treasury to take their money (yields are negative in some cases).

There is no good fundamental reason for inflation to be high now. Big numbers on a Fed spreadsheet isn't reality.

Inflation won't be a problem until unemployment is below 5% and the other things above change. That won't be in 2 years.

Cheers,
Scott.