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Richard Koo: The world did not learn from Japan’s tragic mistakes

March 9, 2011

The Hell-hot Inflation of the 1980's

I cannot say this strongly enough – we’re far, far closer to another round of deflation than most people think.  We have people freaking out about 2.5% inflation.  2.5%!!   Imagine we hit 5% inflation for a few years in a row.  Why – this would be like the hellish hyper-inflationary spiral of the 1980’s! Don’t you remember paying $2.59 for a gallon of Milk back in 1995?

Frankly, I wonder if there is any inflation rate that would satisfy the inflation hawks.  We are only 1 year out from deflation, and core inflation is very near to zero.  I bet that even with negative 1% inflation, Axel Weber would be worried we’re about to devolve into hyperinflation!

Not only that, we have lots of evidence that Quantitative easing doesn’t cause much inflation – namely Japan in the last 20 years.  Richard Koo keeps talking about this, keeps pointing out objective reality, but nobody seems to notice.

 

 

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Categories: Main
  1. crf
    March 10, 2011 at 4:47 pm

    A link to what Koo wrote?

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