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pat solomon's avatar

Very interesting and makes sense that this may work on the monetary policy side. But one element that would not be "held constant" is the impact of this monetary policy on tax receipts and government debt. Reduced economic activity will collapse tax receipts in the US at the same time that interest expense is outstripping tax receipts. This may be the achilles heel that causes the debt bomb spiral.

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Andrew Phillips's avatar

Your in-depth discussion of the nature and causes of inflation is always stimulating. In particular you are refreshingly frank in admitting that few know what is really going on, and those that do are keeping that knowledge to themselves. In such circumstances I usually fall back on the KISS principle as exemplified by the Latin phrase "Cui bono?" The fact stands that indebted governments have everything to gain from devaluing their currencies, and thereby their debt. The problem arises when inflation damages the economy. This is the mustang they are riding

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