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Much of modern macroeconomics revolves around the theory of expectations. http://en.wikipedia.org/wiki/Rational_expectations http://en.wikipedia.org/wiki/Ratio
by tatsuke95 15y ago
Much of modern macroeconomics revolves around the theory of expectations.
http://en.wikipedia.org/wiki/Rational_expectations http://en.wikipedia.org/wiki/Rational_expectations
So, one way to diminish the crippling effects of inflation is to lie and say there is none. Of course, as you say, in the long run you'll get hammered, as people's expectations fly out of whack and they are required to guestimate future rates of inflation.
- wisty 15y agoAccording to modern macroeconomics, people are omniscient, and will see past fake statistics. Also, recessions can't be predicted, because everyone is smart enough to prevent them.
- adrianscott 15y ago"People are omniscient" -- one of several false assumptions that lead to unrealistic results from the theories (and disaster/losses to banks/investors/govt's who base their actions on them)
- erichocean 15y agoHe was being sarcastic.