What’s Old Is New Again

Producer prices fell 0.5% in September, and consumer prices fell 0.2%. The media has taken on board the central bankers’ theme song, “2% inflation is good for you.” Just for a little perspective, here’s a video from the Great Depression (soon to be the Second Greatest Depression):

It didn’t work then. It won’t work now. It is a simple meme to justify money-printing as merely a rational attempt to stimulate “healthy” inflation. Besides, the Fed’s mandate is to target “stable” prices. 2% inflation isn’t “stable.”

The proper state of a healthy economy is mild deflation, as continual improvements in technology and productivity reduce production costs over time.

Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: