Wednesday, January 13, 2010

A Lesson in Inflation

Correct.

I said this long ago.

1 comment:

Anonymous said...

The article missed a third assumption: that the money is hoarded by banks as they are still sitting on a large chunk of bad debt. You can compare it to Japan since 1990, only in the US the banks will probably adjust quicker, also because the Fed injected more money than the BOJ did.

Inflation is really unforecastable today, because we don't really know how banks will behave after this crisis. It may well be that the Fed indeed has the time to pull the plug in time before inflation occurs. The Bank Of Japan has inflated the money supply since 2003 and all the got was deflation/stagnation.