Even After Admitting She Underestimated Inflation, Yellen Still Doesn’t Understand What It Is

According to the June 1, 2022, Financial Times, Janet Yellen, the U.S. Treasury secretary conceded she was wrong last year about the path inflation would take. Yellen told CNN: “There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn’t fully understand, but we recognize that now.” To be able to say something meaningful about inflation, it is necessary to establish what inflation is all about. Note that for Yellen inflation is about the growth rate in the consumer price index, which…