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Do you believe the converse, that inflation is good for the economy (people buying things now bc the price will double in a year)? Unless you're willing to pre
by grandalf 16y ago
Do you believe the converse, that inflation is good for the economy (people buying things now bc the price will double in a year)?
Unless you're willing to prescribe a specific policy remedy, I suggest you clarify your thoughts before making the argument you're making.
- gte910h 16y agoLarge amounts of inflation is bad as well. Small-moderate tends to be good, as it causes investment, and stops us from accidental deflation. I'm arguing to keep the current "small amounts of intentional inflation" doctrine that's currently the goal.
- grandalf 16y agoThe Fed shows no signs of stopping its approach. With quantitative easing, etc., the Fed has actually created negative real interest rates. If anything I'd be worried that there are powerful interests lobbying for targeted booms. The housing/building sector has been a huge beneficiary of transfers of wealth from taxpayers and users of currency as a store of value, and probably has its sights on another Fed-fueled building/housing boom. Right now lots of Americans make payments on credit cards which are useless bc the limit has been reduced, etc. There is also pressure on the Fed from banks who know that there could be waves of new defaults in consumer credit cards. So on balance I think the fear is an over-reaction by the Fed rather than an under-reaction. There is also an interesting meme coming into focus in which credit is viewed as a right just like healthcare.