4/08/2005

Is Inflation Back

We all believe that Alan Greenspan is increasing interest rates slowly bit by bit to insure that inflationary pressures are at a minimum. In the article “Is Inflation Back” by Daniel Kadlec posses a different concept on the interest rate hikes. He says that Greenspan my be increasing interest rates in part to have room to cut them again given the economy starts to deteriorate. I don’t agree with Mr. Kadlec but I am sure most don’t.

3 comments:

Fred said...

No, that sounds like a conspiracy theory to me. Sounds like Kadlec ignores some of the basic principles of inflation and interest rates in his line of thinking.

C-Dizzle said...

Greenspan raises and lowers interest rates regularly. I don’t think we should jump to conclusions about an upcoming explosion of inflation. Greenspan constantly makes little changes here and there to help prevent sudden spikes in inflation.

Dr. Tufte said...

The English have a good phrase for people like Daniel Kadlec and the economist he cites: too clever by half.

Their position is that somehow Greenspan lacks credibility (in what way is not clear). I suspect that they mean he lacks credibility as an inflation figher. This is nonsense. You have to have failed at fighting inflation for that to be reasonable.