Inflation is a hot topic now, with comments from Federal Reserve Chair Jerome Powell looking like veiled hints as to when (no longer if) the Fed will get serious about hitting the monetary brakes to slow the economy. Until recently, inflation was described as transitory, or just passing through. But at some point, as the days flutter by, the story has to change. Transitory? Temporary? Or had we better get used to it?

Now, Fed commentators and others are suggesting price levels will rise into 2022. There can be no doubt that we have inflation and that the Fed can clobber the economy to purge it, but some basic questions remain to be addressed: What’s so bad about it? Can’t we just learn to live with it? What needs to change?

Yes, inflation is real. The all-item consumer price index (CPI) was up more than 5 percent on a year-over-year basis for July, August, and September, and now shows a 6.2 percent increase for October—the largest jump since 1990. The Fed considers 2 percent inflation to be its bright-line monetary policy goal. Obviously, there is a large gap between that and what we are seeing on the ground.