Supply-Sider's Take On Future Inflation

That supply-sider is the "Calafia Beach Pundit," and his analysis is over at Seeking Alpha. He looks at eight inflation gauges: the real broad dollar index, the gold price, the inflation-adjusted gold price, the CRB/Reuters Spot Commodity Index, Real Fed Funds, the CPI, TIPS inflation expectations, and investment-grade credit spreads. All of the charts he uses, except for TIPS inflation expectations and credit spreads, go back to the 1970s or earlier.

The picture that results is "inflation ahead" - even though the CPI hasn't really co-operated as yet. He notes in his conclusion that the Keynesian measures, such as excess capacity and unemployment, say something different:

All of these market-based indicators of inflation fundamentals are pointing in the same direction: higher. Meanwhile, traditional indicators of inflation that the Fed focuses on, such as the degree of economic slack and the unemployment rate, are pointing to very low or even negative inflation. Who's right? No one that I know has yet come up with a foolproof method or theory for predicting inflation, but I think it is reasonable to predict that inflation will be higher than the market expects (current expectations being for inflation to average 2-2.5% over the next 5-10 years).

One impression from the gold and commodity graphs is the sea-change that occurred in the '00s. In the '90s, gold was dropping and the CRB was in a long-term range, like equities are now. In the '00s, the direction for both decisively turned to the up side.