A good article I stumbled across this evening…
Sometimes, Inflation Is Not Evil
By FLOYD NORRIS
Thirty years ago, it became clear that defeating inflation was crucial, even if the means needed to accomplish that would cause a deep recession. By the time the European Central Bank was created in the 1990s, it seemed so obvious that inflation must be fought that the bank was given only one mandate — to fight inflation. The other mandate given to its United States counterpart, the Federal Reserve — to promote employment — was pointedly not included.
It is time for a new lesson to be learned. Sometimes we need inflation, and now is such a time.
Had the central bankers of the world understood that inflation in asset prices could be just as bad as, if not worse than, inflation in the prices of consumer goods, this would not be necessary. But they did not. So they did nothing to resist soaring home prices, just as they had seen no reason to worry about the Internet stock bubble.
Read the rest of the article via:
Sometimes, Inflation Is Not Evil – NYTimes.com.