"they are always going to lean towards inflation as easier to deal with"

Dr. Philippa Malmgren, tidigare Special Assistant till den amerikanska presidenten inom Economic policy, bjuder på några intressanta citat i en intervju från förra veckan:


Today the former Special Assistant to the President of the United States for Economic Policy and former member of the U.S. President’s Working Group on Financial Markets spoke with King World News about coming financial chaos

Dr. Malmgren:  “Not only that, but I think central bankers feel that they know exactly how to fix an inflation, but they know nothing about how to deal with a deflation.  So given a choice between the two problems, they are always going to lean towards inflation as easier to deal with. 

But they forget that it’s a political problem.  Back in the 1970s my father was the Co-Chief Economic Advisor to President Ford, (along) with Alan Greenspan.  And everyone forgets that between 1973 and 1979 when Paul Volcker was brought in, it took 5 years of really heavy argument before anybody agreed on which was a bigger problem, unemployment or inflation.

We call those years, ‘The Stop-Go Years,’ because they kept dealing with one, and then reversing and dealing with the other.  So you were ‘stopping-and-going’ the whole time.  5 years of having deep uncertainty about what is the nature of the problem and what is the government doing about it, that’s pain, real pain.

So the idea that, ‘Oh, don’t worry.  If we get little inflation we know exactly what to do,’ I think is absolutely not what it’s going to look like.”