Sunday, September 6, 2015

More Evidence Paul Krugman Doesn't Understand Price Inflation...

...and how it develops.

He writes at NYT:
[I]nflation is subdued, indeed below target, and wages are still going nowhere. Should the Fed be raising rates in the name of “normalization”?...Hiking rates now is still a really bad idea — and the arguments for that bad idea just keep getting worse.
I am putting this in the Krugman file, if he had any idea how quickly price inflation could develop, especially under current conditions, he would never be writing like this. It is going to make him look like a sap once again, down the road. Indeed, I am calling it now in advance.

I actually think most of the Fed members, especially Fed vice-chairman Stanley Fischer, grasp the current price inflation threat in much better fashion than Krugman, though they have no clue as to how out of control it could get.

Fischer said just recently at Jackson Hole:
 Yet, because monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2 percent to begin tightening. 
Compared to Krugman, Fischer sounds like Ron Paul.


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