The Eternal Plea for Inflation


Source: The Eternal Plea for Inflation – The Daily Reckoning


We learned in yesterday’s Washington Post that the Federal Reserve “needs to learn to love inflation.”

Economics writer Matt O’Brien argues the Fed’s 2% inflation target is far too modest… that Janet Yellen lacks something in the way of vocational ambition.

This fellow believes Ms. Yellen should set her cap much higher — 4% inflation:

The higher inflation is, the higher interest rates have to be to control it — and the more room there is to cut them when the economy gets into trouble. So if a 2% target doesn’t get rates high enough to keep them away from zero, then maybe a 4% one will…

So if the Fed wants to get back to a world where interest rates don’t spend a lot of time at zero, it will need to not only try to…

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