tag:blogger.com,1999:blog-2249851329008146395.post3031847824632582771..comments2023-10-30T09:11:12.922-07:00Comments on Clouded Outlook: Goodbye Axel Weber and Kevin Warsh - we will miss youAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2249851329008146395.post-79440336834814849112011-02-16T15:24:04.092-08:002011-02-16T15:24:04.092-08:002 points.
Inflation does not need to transfer wea...2 points.<br /><br />Inflation does not need to transfer wealth from creditors to debtors. Consider: <br /><br />An economy with 2% inflation and 4% interest rates <br /><br />is the same as<br /><br />an economy with 4% inflation and 6% interest rates.<br /><br />Higher inflation just means that creditors have to charge more interest. <br /><br />The economy with higher inflation and interest rates is a safer one because it has more room for monetary policy when a recession hits. And more room for monetary stimulus means less need for fiscal stimulus - now there's an idea you should like.Barry Thompsonhttps://www.blogger.com/profile/09769284318856079590noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-15339693444593703662011-02-14T18:15:19.299-08:002011-02-14T18:15:19.299-08:00Barry,
Thank you for your comment. You ask a fai...Barry,<br /><br />Thank you for your comment. You ask a fair question.<br /><br />I believe that inflation is profoundly evil. It always involves an arbitrary redistribution of wealth from savers to borrowers. It is an undemocratic tax. <br /><br />My hatred of inflation is partly driven by fear. If unchecked, inflation threatens to destroy the middle class, which I regard as a necessary bulwark of civilisation.<br /><br />I also believe that fiscal tightening is inevitable. The sooner, the better. <br /><br />I recognise them up front tightening may have output costs. However, I believe that any delay would only raise those costs. <br /><br />A delay also increases the probability of a disorderly fiscal adjustment. We have already seen this in Ireland and Greece.<br /><br />Ultimately, I fear disorder and chaos. I crave policy rules and stability.<br /><br /> AliceAlice Cookhttp://cloudedoutlook.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-27404577830348839612011-02-14T15:20:50.026-08:002011-02-14T15:20:50.026-08:00Krugman was simply glad that two people who believ...Krugman was simply glad that two people who believe in tightening in the face of recession are not in a position of influence any more. That's good for Europe and the US.<br /><br />The question is, why does Alice believe that tightening is the cure for recession? It is as if she only cares about inflation and nothing else.Barry Thompsonhttps://www.blogger.com/profile/09769284318856079590noreply@blogger.com