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Commandeering The Punchbowl
Aug. 1st, 2008 12:17 pmKrugman on why he doesn't think we're heading into an inflationary spiral, and why he thinks it's dangerous if too many people think we are.
I don't think there's any fundamental inflation problem, just a one-time hit on food and energy. I suspect that Ben Bernanke believes the same, but he has a problem - namely, that many people inside and outside the Fed believe in (2), even though there's no sign of it in the data. Any day now, they warn, inflation is going to break out all across the economy, and the Fed needs to take the punchbowl away NOW NOW NOW, never mind the weak economy.
Also, he links this piece by Louis Uchitelle, which he thinks is quite good; it's more detailed but on the same topic.
I don't think there's any fundamental inflation problem, just a one-time hit on food and energy. I suspect that Ben Bernanke believes the same, but he has a problem - namely, that many people inside and outside the Fed believe in (2), even though there's no sign of it in the data. Any day now, they warn, inflation is going to break out all across the economy, and the Fed needs to take the punchbowl away NOW NOW NOW, never mind the weak economy.
Also, he links this piece by Louis Uchitelle, which he thinks is quite good; it's more detailed but on the same topic.
