Paving the road for Inflation

Discussion in 'Economics' started by jueco2005, Feb 22, 2010.

  1. Radical thoughts on 19th Street
    A higher inflation target for central banks would be a bad idea

    Feb 18th 2010 | From The Economist print edition

    EVEN in economics, the guardians of orthodoxy are not given to capricious changes of mind. So when economists at the IMF question received wisdom and the fund’s established views twice in a week, it is no small matter. Two new papers have done exactly that. The first reversal, on inflation targets, makes less sense than the second, on capital controls.

    The initial firecracker came on February 12th, with an analysis of the lessons of the financial crisis for macroeconomic policy, led by Olivier Blanchard, the IMF’s chief economist. The report called for several bold innovations. The most radical of these is that central banks should raise their inflation targets—perhaps to 4% from the standard 2% or so.

  2. Who says they will be successful? The Japanese have been trying to create inflation for 20 years with not much to show for.
  3. Didn't Nixon install "wage and price controls" because inflation rose to 4%? Now they want us to accept that as an "operating norm"... WTF??
  4. From Krugman's blog:

    "What I find myself looking at these days are the Cleveland Fed 'trimmed' inflation measures, which exclude outlying large price movements; the ultimate trim is the median, the rise in the price of the median category. And these indicators tell a story of dramatic disinflation in the face of a week weak economy:"



    Even if there is significant inflation, the gubbamint will never report it.
  5. The government has much to gain by reporting inflation. And much to lose by reporting deflation. Why wouldn't they report inflation?
  6. As someone who sincerely has no respect at all for you or what you say due to your comments in a different thread regarding Canada, as well as the overall clear indication that you are not very well educated, I will still do you the favor of responding.

    There is one thing the USA should worry about given it's insane debt levels:


    Deflation would bring about absolute and certain default. Protect against deflation, protect against default. This won't help solve the USA government's spending binge or budget deficits, but it protects against debt owed from getting into an even worse situation by itself.