Author Topic: Why Are We All So Obsessed With Inflation?  (Read 183 times)

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Online mystery-ak

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Why Are We All So Obsessed With Inflation?
« on: April 07, 2014, 11:55:55 AM »
http://www.motherjones.com/print/249226

Why Are We All So Obsessed With Inflation?
Because we all fear a repeat of the 70s.

By Kevin Drum | Mon Apr. 7, 2014 8:36 AM PDT
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Why are we all so obsessed with inflation

Paul Krugman brings up a familiar trope this weekend: [1] why is it that everyone is so obsessed with ultra-low inflation, even in the middle of a sluggish economy that would almost certainly benefit from a few years of 4 percent price growth? His answer: rich people are uniquely vulnerable to high inflation, and therefore fear it. And since rich people have tremendous influence on policy—especially economic policy—we've consistently implemented policies dedicated first and foremost to restraining inflation. Tyler Cowen [2] dissents:

Quote

    We all know that inflation is extremely unpopular with voters.  We also observe that inflation remains extremely unpopular in a variety of northern European economies, which typically have more egalitarian distributions of income (though not always wealth) than does the United States.  In any case the top 0.1 percent in those countries has less wealth per capita than in the U.S. and, at least according to progressives, less political influence too.

    ....People that wealthy can put their money into hedge funds, private equity, private capital pools, and the like....The very wealthy also have the greatest ability to hedge against inflation using derivatives and commodities, if they do desire....I am not suggesting that the very wealthy are out there pushing for higher inflation. But they are much more protected against such inflation than Krugman’s analysis suggests, and the middle class in protected service sector jobs is more vulnerable than is usually recognized.  There is a reason why 4-6% price inflation has become the new third rail of American politics.


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Offline massadvj

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Re: Why Are We All So Obsessed With Inflation?
« Reply #1 on: April 07, 2014, 11:57:56 AM »
Krugman has it entirely wrong.  Inflation harms the low income person far more than it harms the rich.
"She only coughs when she lies."

Offline Relic

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Re: Why Are We All So Obsessed With Inflation?
« Reply #2 on: April 07, 2014, 12:33:11 PM »
Krugman has it entirely wrong.  Inflation harms the low income person far more than it harms the rich.

As a person who lived in inflationary times, on a very modest income, I'm here to tell you that you're correct.


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