On the heels, of a blog post where he calls for money printing,Paul Krugman now advocates the same in a full NYT column:
...if the U.S. government prints money to pay its bills, won’t that lead to inflation? No, not if the economy is still depressed.He writes this even though the year 2013 may turn into a perfect storm year for price inflation, given:
Now, it’s true that investors might start to expect higher inflation some years down the road. They might also push down the value of the dollar. Both of these things, however, would actually help rather than hurt the U.S. economy right now.
1. Bernanke is printing money like a mad man.
2. The desire to hold cash is declining.
3. The drought will cause a dramatic increase in meat prices (Note: A supply side problem and not technically overall price inflation)
4. The potential of a collapsing dollar in foreign exchange markets (Even Krugman acknowledges this one).
If all these factors continue to develop as we go into the new year, price inflation will be a major problem in 2013. Krugman has no clue.