Wednesday, November 06, 2013

Free-Floating Inflation Hysteria

Paul Krugman points out the flaw in Free-Floating Inflation Hysteria

What remains notable, however, is just what all Republicans are obliged to say: Ron Paul monetary theory has become obligatory:

Vice Chair Yellen will continue the destructive and inflationary policy of pouring billions of newly printed money every month into our economy, and artificially holding interest rates to near zero. This policy has been in place far too long.

So, the Fed began rapidly expanding its balance sheet when Lehman fell — more than five years ago. Here’s the result of that ‘destructive and inflationary’ policy so far:

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It’s not often that you see an economic theory fail so utterly and completely. Yet that theory’s grip on the GOP has only strengthened as its failure becomes ever more undeniable.

Remember, if someone tells you we're in hyperinflation or it's just around the corner, tell them inflation is at 1% and it's been that way for 5 years now and that's the problem. It needs to be a little higher for the economy to recover. And tell them to stop listening to Ron Paul.

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