Been having some great debates around the web ON:
– Inflation
– Monetary policy
– and Fiscal Policy
The one particular item that we all get wrapped up on is inflation. The word is thrown around without proper qualifications, and I am just as guilty. Though I do try to define it as well.
Let’s take the common cry heard around that QE will cause inflation. Well what rate of inflation are we talking about? 3% or hyperinflation, which I would describe as persistent double digit inflation. Should the acceptable rate of inflation change based on the circumstances? IMO QE will not cause hyperinflation, so far the inflation experience is very low, and its declining (Thanks to Mark Sadowski I will use PCEPI for the inflation measure):
Been having some great debates around the web ON:
– Inflation
– Monetary policy
– and Fiscal Policy
The one particular item that we all get wrapped up on is inflation. The word is thrown around without proper qualifications, and I am just as guilty. Though I do try to define it as well.
Let’s take the common cry heard around that QE will cause inflation. Well what rate of inflation are we talking about? 3% or hyperinflation, which I would describe as persistent double digit inflation. Should the acceptable rate of inflation change based on the circumstances? IMO QE will not cause hyperinflation, so far the inflation experience is very low, and its declining (Thanks to Mark Sadowski I will use PCEPI for the inflation measure):
http://research.stlouisfed.org/fredgraph.png?g=mGU
So are we really arguing over “targeting” inflation variations of 50-100 bps? Is that even meaningful?