the dove argument is pretty simple. the credit/banking crisis and real estate meltdown is a Volcker by itself. the 74 stagflation scenario was a supply shock due oil embargo, without a supply shock like that and with falling demand inflation will decrease
The problem for that position is that inflation is above the headline rate in the USA, UK, and Eurozone. Since we are already pretty much on the borderline of recession, inflation should have fallen - yet it has remained stubbornly high. If inflation were low and falling, the ECB would not be raising rates this week. They are just responding to the data.
Not to be an org..but we need one of two things for inflation to come down. Either large increases in production, or a lot more starving kids (children) in the third world. Ideally its number one.
thanks gnome and cutten to bring some sense to this thread and bring some light into the lives of some highly ingnorant people.
Nice one,Poirot.Before you declare yourself the authority on economics you might want to learn to read and write in English,your posts are littered with both spelling and grammatical errors and it somewhat dents your credibility. Don't you think it's kind of ironic that you misspelt 'ignorant'?
Of course this tiny increase by itself has next to zero real world effect. What though if - And I can't help the notion when reading interviews with Weber - this tiny increase ends up being a longer series of hikes 'just to make sure'? Just like the Bundesbank did in 1990/91? If the ECB was serious of reaching their headline inflation target 'of around but not far below 2.0%' then they'd have to hike to 6, 7 or 8%.
yes smartass, that's a really bad mistake, it was 3 a.m. (actually almost 4 a.m.) where I live ... and english is my third language, so we could continue this conversation ... in dutch, french, german or ... oh, problem, guess you don't know any of those languages :eek: let alone spell in them or make grammatical mistakes guess that makes you not very credible too