The reason a little inflation is not all right, and the reason inflation comes suddenly, is expectations.

The phrase “perception is reality” is overused generally. But perception can be reality in monetary policy. The bond market doesn’t act merely on what it sees. It acts on what it expects of the Fed or the government. And our own Fed has let us know it’s capable of just about everything, which includes inflationary monetary policy. Disillusionment can come as fast as a gust, but building faith that the government won’t inflate again is like building a new sailboat, a project of years. Another way to put this is how the central banker Henry Wallich did. Inflation is like a banana, Jerry Jordan of the Cleveland Fed quoted him as saying. Once you see one brown spot, it’s too late.

The reason that markets haven’t jumped yet is that the last great inflation and correction happened in the late 1970s and early 1980s, just long enough ago that most adults in the financial markets don’t remember it.

We can debate whether today’s challenge resembles that faced in the early 1980s, or something worse. But one thing is clear: pretty soon, we’ll all be in deep water.