Relevant:
- Was Stagflation in ‘79 Really Hyperinflation?
- Are Trichet's Rate Hikes 1930 All Over Again?
- Monetary Watch June 2011, Inflation prospects post QE II
- Russia Increases Deposit Rates as Price Inflation Climbs``
- Rosenberg: Inflation -- and interest rates -- may be in a coma, but they are far from dead
2008-01-21 — cnn.com
Bernanke is setting the stage for an even bigger recession down the road. Just as the ultra-low rates of the early 2000s created many of the problems we're experiencing today, pumping money into the system would probably stoke inflation, forcing the Fed to hike rates sharply in the near future. "It's better to take a small recession and kill inflation immediately instead of facing high inflation and a really big recession later," says Carnegie Mellon economist Allan Meltzer.
The Fed thinks it can have its cake and eat it too by lowering interest rates but not growing the monetary base. Ultimately this will just harm the dollar, harm the financial markets, and make long-term financing more expensive for regular people.
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