Monday, March 9, 2015

Is Paul Krugman Backing Away from His Deflation Warning?

It appears so. He is far from holding the view that price inflation is around the corner. He won't write about accelerating price inflation until ity is obvious, and that is many months away. But he is backing away from his deflation concern. He wrote yesterday:
[T]he current situation looks quite a lot like the mid-90s, with unemployment basically at the Fed’s estimate of “full employment” but no sign of inflation — except that back then wages were rising much more vigorously than now. Now, as then, there is a very real possibility that we have lots more room to run, if the Fed lets us.

So I am guessing, he has completely abandoned the view he outlined his 2012 book, End This Depression Now!

1 comment:

  1. No, he is still concerned about deflation. That blog post was a preview of today's op-ed which includes the following line: "in the worst case, we might end up sliding into a Japanese-style deflationary trap, which has already happened in Sweden and possibly in the eurozone."