Ben Bernanke recently wrote a guest essay in the New York Times where he compared the current inflation situation to the 1960s and 1970s inflation episode, which he called "The Great Inflation". Mr. Bernanke explained what he saw as the differences and similarities to our current inflation, and how we are "almost certainly not" going to repeat that experience.

His argument seems to hinge on two facts:

1.) The Fed currently has much more policy independence than it had in the 1960s and 1970s, so they will be able to do their job more effectively without presidents or Congress trying to meddle with their mandate, and;

2.) The American public has more confidence in the Fed keeping long-term inflation rates down, which makes us less vulnerable to a wage-price spiral which would keep inflation higher for longer.

With regards to the Fed's independence, I think that the Fed hasn't seen pressure from the President or Congress lately because their policy has been historically accommodative. The Federal Funds rate is at an almost all-time low while inflation is at 40-year highs. Back in "The Great Inflation" as Bernanke is fond of calling it, the Federal Funds Rate was between 4% and 8% during the times when the Fed and other policymakers butted heads. As interest rates rise, and the economic stakes rise, I don't know if we can count on the better angels of the President and of Congress to continue to respect the Fed's mandate.

As far as a wage-price spiral, we have a very strong labor market, and those labor market participants aren't going to not ask for compensatory raises to offset inflation because they believe in a vague way that the Fed is going to reign in inflation. They are more concerned with paying their bills now -- and with two job openings for every job seeker right now, employees are in the catbird seat for compensation negotiations. Ask yourself: would you be happy with a 3% raise this year?

Links:

Op-Ed:

https://www.nytimes.com/2022/06/14/opinion/inflation-stagflation-economy.html

https://www.richmondfed.org/publications/research/econ_focus/2016/q3-4/federal_reserve

Graph of Federal Funds Rate:

https://www.macrotrends.net/2015/fed-funds-rate-historical-chart

US BLS Job Openings:

https://www.bls.gov/charts/job-openings-and-labor-turnover/unemp-per-job-opening.htm

The Balance, Fed Funds Rate History:

https://www.thebalance.com/fed-funds-rate-history-highs-lows-3306135