Why not inflation?

29 May 2009

Paul Krugman writes in today’s NYT about inflation. In particular, he voices a sentiment that I’ve been thinking for awhile now:

So is there any reason to think that inflation is coming? Some economists have argued for moderate inflation as a deliberate policy, as a way to encourage lending and reduce private debt burdens. I’m sympathetic to these arguments and made a similar case for Japan in the 1990s. But the case for inflation never made headway with Japanese policy makers then, and there’s no sign it’s getting traction with U.S. policy makers now

.

The question is why not? Surely some degree of inflation would be good for the housing market, as well as the consumer credit markets.

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