A colleague keeps sending me articles about the dangers of inflation, including this op-ed today by Larry Summers. What's a good way to refute the argument Summers is laying out. I don't really know econ/finance stuff particularly well.
A colleague keeps sending me articles about the dangers of inflation, including this op-ed today by Larry Summers. What's a good way to refute the argument Summers is laying out. I don't really know econ/finance stuff particularly well.
I'd prefer to raise taxes on the wealthy, but that is not what I mean.
The value of the dollar is (loosely, don't @ me economists) the total value of things you can purchase with dollars divided by the number of dollars in circulation. When the government prints money to do things, there are more dollars in circulation, so the value of each dollar goes down (inflation). When the government collects taxes, it removes dollars from circulation, so the value of each dollar goes up (deflation).
If someone is worried about inflation, increasing taxes is just as logical a solution as decreasing spending. (But they're not actually worried about inflation, so they'll never suggest this.)
Yep, that's the kicker. We're in a hard monetarist ideology that says the only way to deal with inflation is interest rate hikes, but whoever is crafting budgets has the ability to take money in and out of the system.