Hyperventilating about hyperinflation
There's no debate that the long term implications of the Fed's actions this week (i.e. making it rain on the economy) are very inflationary. However, that's not a very sophisticated observation. I vaguely remember learning about that in AP History just over a decade ago...it's high school insight to say that loose and prolonged monetary policy will lead to runaway inflation. That's a luxury that observers are allowed to enjoy; they get to criticize the solutions without the obligation to address the problems.
I, for one, would much prefer the late 70's to the ENTIRE 30's. Bitching about hyperinflation is akin to a cancer patient regretting the hair loss and nausea that result from chemotherapy. No rational doctor would recommend chemo unless the risks were outweighed by the potential rewards.
We know how to address inflation; you cut government spending, cut taxes, and tighten money supply: Reaganomics. However, we don't know how to prevent a depression (anti-Hoovernomics?). Under these specific circumstances its better to risk over-inflation that to risk over-deflation and there's not an economist worth his or her salt that would disagree with that statement. The real debate is whether or not the Fed (Bernanke) will be able to make the necessary moves at the necessary times and we wont know if they can't until they haven't. Relaxing, I know...
There's no question that the road ahead is treacherous; but, I would prefer that we try to steer around the iceburgs over trying to plow through them...The chips are on the table fellas; time to deal.
