Replies to post #153219 on Zeev's Turnips Patch-No Politics (ZEEV)

[carl_p_r2]

Schloss, I disagree with your assessment that inflation could not have been created in the 1930s. At that time the economy in Europe was facing the same depression, and Germany was quite successful in creating inflation.

I would agree that the depression was not a monetary event, but my opinion is that a depression can have many different faces, including deflation, stagflation, and even hyperinflation. I don't believe in the Phillip's curve. In my opinion, all monetary policy can do is change the face from deflation to stagflation. I also believe that if faced with the choice, the Fed would most certainly choose stagflation as the less painful alternative. Stagflation would keep people from walking away from homes, it would keep pensions solvent, and it would be better for banks, though it would rob the savings of those on fixed incomes.

Carl

[Elroy Jetson]

the Finance Minister of Japan said that "deflation is not a monetary event; it is a structural problem." Too many goods and not enough willing buyers.

Now you know why Japan is such a success story with a booming economy! Their officials are in complete denial of economics.

An economy with a stable money supply and improving productivity will experience deflation. This is both normal and desirable.

Japan's structural problems have nothing to do with deflation.