Macro Musings Blog
We are getting Japanned.Yes, absolutely the United States can inflate. Sheesh, if we ran five percent inflation for five years, the value of the national debt outstanding would be reduced in value by a little more than 25 percent, while our economy expanded. Oh shocking, you mean the rates of inflation we had when Reagan was president? Oh, horrors!BTW, check out the CPI. From July of 2008 to June of 2011, the CPI-U rose from 219.964 to 225.722, or a 2.62 percent increase in three years. And this July is likely deflation, due to oil prices. Please bloggers, this August 20 (?) when July CPI figs come out, compare them to July 2008. I suspect we will be at about 2.5 percent inflation for the entire three-year period (annual about 0.8 percent). We are getting Japanned and hard! Why all the hysteria about minute rates of inflation in the right-wing? It speaks to a type of dementia. The Chicken Inflation Littles are running the right-wing roost.Ironically (and sadly) it was Milton Friedman who advocated aggressive and sustained use of QE in situations like we face today. He flat out told Japan to inflate. As did Bernanke! There are times when inflation is good, and now is one of those times. Okay, call it NGDP targeting--the fact is, inflation would help a lot of property owners and small business borrowers and the US taxpayer too. All the whimpering and pettifogging about debasing the currency comes from people with an unhealthy attachment to the symbols of money (gold or cash), as opposed to an appreciation of true wealth-building.
Peter Dorman says much more eloquently what I have been banging on about:http://econospeak.blogspot.com/2011/08/its-political-economy-stupid.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+espeak+%28EconoSpeak%29