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Illustration: Lazaro Gamio/Axios

The absence of inflation is forcing a wide-ranging rethink of long-held economic assumptions.

Driving the news: In his annual letter to shareholders, Warren Buffett admits that though he regularly preached "doom because of government budget deficits" he is no longer in that camp. And former IMF chief economist Olivier Blanchard argued in a speech that for countries like the U.S., high public debt isn't necessarily a problem.

The state of play: As the New York Times' Neil Irwin points out, politicians also are quickly joining the deficits-don't-matter club.

  • Rep. Alexandria Ocasio-Cortez (D-N.Y.) recently indicated openness to "modern monetary theory," the idea that deficits don't matter for countries that can print their own money.
  • President Trump did not once mention the debt or budget deficits in this year's State of the Union address, nor did he mention it last year, despite expected annual shortfalls over $1 trillion.

What's happening: The debt has not mattered largely because inflation has been absent from the economic equation.

  • It's inflation that raises capital and labor costs for businesses, reduces available capital for investment and clogs government balance sheets, forcing other expenditures to be capped or scrapped. But over the past decade or so, inflation has been a non-factor, even after back-to-back years of above trend growth and government spending binges.
  • Economists have argued about the reasons, pointing at everything from the internet to the lack of unions to globalization to the way companies have invested their profits. But the end result remains the same.

What they're saying: "We've got inflation well under control here, and we don't need to be pre-emptive trying to control inflation going forward," St. Louis Fed President James Bullard said Friday.

  • In an interview the same day, Bullard elaborated, saying there has been a breakdown in the "Phillips curve," or the relationship between unemployment and inflation. "That's got people backing off the idea that there’s such a lockstep relationship between the real economy and inflation," Bullard said.
  • Further, officials at the Federal Reserve now are reconsidering the 2% inflation target that has been in effect since 2012.
  • Other central banks also are moving away from raising rates or slowing down stimulus as inflation has globally gone missing in developed markets like the Japan and Europe as well.

But, but, but: The ongoing crisis in Venezuela has shown that too much money chasing too few goods can still create problems. President Nicolás Maduro's money printing has led to an expected 10,000,000% inflation this year, undermining any attempts to stabilize the country's currency or its economy.

Go deeper: Warren Buffett argues government budget deficits don't matter

Go deeper

Scoop: Gina Haspel threatened to resign over plan to install Kash Patel as CIA deputy

CIA Director Gina Haspel. Photo: Win McNamee/Getty Images

CIA Director Gina Haspel threatened to resign in early December after President Trump cooked up a hasty plan to install loyalist Kash Patel, a former aide to Rep. Devin Nunes (R-Calif.), as her deputy, according to three senior administration officials with direct knowledge of the matter.

Why it matters: The revelation stunned national security officials and almost blew up the leadership of the world's most powerful spy agency. Only a series of coincidences — and last minute interventions from Vice President Mike Pence and White House counsel Pat Cipollone — stopped it.

Updated 7 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Coronavirus deaths reach 4,000 per day as hospitals remain in crisis mode — CDC warns highly transmissible coronavirus variant could become dominant in U.S. in March.
  2. Politics: Biden says, "We will manage the hell out of" vaccine distribution — Biden taps ex-FDA chief to lead Operation Warp Speed amid rollout of COVID plan — Widow of GOP congressman-elect who died of COVID-19 will run to fill his seat.
  3. Vaccine: Battling Black mistrust of the vaccines"Pharmacy deserts" could become vaccine deserts — Instacart to give $25 to shoppers who get vaccine.
  4. Economy: Unemployment filings explode againFed chair: No interest rate hike coming any time soon —  Inflation rose more than expected in December.
  5. World: WHO team arrives in China to investigate pandemic origins.

John Weaver, Lincoln Project co-founder, acknowledges “inappropriate” messages

John Weaver aboard John McCain's campaign plane in February 2000. Photo: Robert Schmidt/AFP via Getty Images)

John Weaver, a veteran Republican operative who co-founded the Lincoln Project, declared in a statement to Axios on Friday that he sent “inappropriate,” sexually charged messages to multiple men.

  • “To the men I made uncomfortable through my messages that I viewed as consensual mutual conversations at the time: I am truly sorry. They were inappropriate and it was because of my failings that this discomfort was brought on you,” Weaver said.
  • “The truth is that I'm gay,” he added. “And that I have a wife and two kids who I love. My inability to reconcile those two truths has led to this agonizing place.”