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Inflation in the Shadow of Debt
Generally speaking, inflation can be stabilized with little recession if people believe the necessary policy tightening will be seen through, rather than abandoned at the first signs of pain. Unfortunately, US economic authorities have done little to inspire such confidence.
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STANFORD – Today’s inflation is transitory, our central bankers assure us. It will go away on its own. But what if it does not? Central banks will have “the tools” to deal with inflation, they tell us. But just what are those tools? Do central banks have the will to use them, and will governments allow them to do so?