25 Sep 2012

Inflation Is the Plan

All Posts, Bob M Video, Shameless Self-Promotion 18 Comments

I decide to go Bradley Manning on the economics profession. The world needs to know!

18 Responses to “Inflation Is the Plan”

  1. Joseph Fetz says:

    But not the right pan.

  2. Bharat says:

    Do they ever account for the fact that higher inflation expectations also means more people buying money commodities such as gold and silver? Or this form of “consumption” welcome as well?

  3. bill woolsey says:


    I don’t know what others think, but having people buy gold and silver with money is just fine.

    Why not?

    • Bob Murphy says:

      Bill, if a bunch of Tea Party people went out and bought gold tomorrow because Glenn Beck told them Obama was going to get reelected, do you think Krugman would say Beck was helping the economy?

      • Bill Woolsey says:

        If they used funds from their FDIC insured checking accuonts, took currency out of their cookie jars, or sold off T-bills and even longer government bonds, it would help. I think Krugman would agree, but I don’t know.

        • skylien says:

          So people who hoard gold at the moment are good for the economy right now?

          If yes, are you buying?

    • Tel says:

      It becomes very quickly not fine when people start buying the gold and silver with things like food or hours of work.

  4. Bob Murphy says:

    BTW, it occurred to me after I posted this that it misleadingly lumps Sumner into the “motivate people through changing the real interest rate” camp, when that is clearly Krugman. I think it’s more accurate to say that for Sumner, rising price inflation really is just a byproduct, but one to which he’s indifferent.

    (I mean, it’s not a gross mischaracterization. Sumner is happy to see rising inflation expectations after a QE announcement, and he also credited Krugman’s Japan work as being important in the Market Monetarist worldview. But there is a sense in which Krugman wants price inflation more than Sumner does.)

  5. Bill Woolsey says:

    Sumner wants more spending on output, and the less inflation and more real output growth the better.

    Sumner rejects the view that expected inflation is necessary to caused higher expenditure today. That is, if it turned out that more spending in future lead only to more real output growth and no more inflation, Sumner believes that spending would rise now. And if spending rises now, it would be better if there was no inflation now and more real growth now.

    On the other hand, Sumner expects that that more spending growth in the future will cause higher inflation in the future and more spending growth now will cause more inflation now. Mostly, this would be a readjustment of the price level–reversing the disinflation.

    And finally, if there is a productivity slowdown, keeping spending growing at the same rate and having higher inflation is the least bad option, though it is better not to have a productivity slowdown.

  6. Tel says:

    I presume that at least part of the plan is that China and Japan cannot afford to follow the inflationary spiral as the US dollar devalues. Thus, they will have to allow their currencies to revalue against the US dollar and thus staunch the outsourcing that we have seen recently in US industry.

    That at least would be a real shift.

  7. Blackadder says:

    It’s all true. For example, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota has suggested that the Fed temporarily raise it’s inflation target from 2% to 2.25% until unemployment comes down.


  8. Lurker says:

    Is it just me or is the audio in these videos really low?

  9. zee says:

    is the audio only working in the left speaker?

    • Tel says:

      Yes, that’s correct.

      Overall the audio quality is a lot better than it was last time. The annoying buzz is gone. For my own reference, what actually fixed that?

  10. Craig says:

    The audio is so low. Could barely hear it at max. volume. And I didn’t want to go all spinal tap and turn it to 11.
    It was the same with a video you posted last week.

    • Bob Murphy says:

      I’m working on the right/left speaker deal, but I don’t understand why people are saying that about the volume. I can hear it fine through my laptop. Are you listening on headphones?

      • Dan says:

        It’s not low on my iPad

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