Thursday, February 28, 2008

Pay me now or pay me later

An insightful commentary from Robert Samuelson yesterday provided an excellent perspective to the recent discussions regarding recession and stagflation. For example:

Naturally, no politician acknowledges the self-evident implication: that recessions, though unwanted and hurtful to many, are not just inevitable; sometimes they're also necessary to prevent the larger and longer-lasting harm that would result from resurgent inflation. Interestingly, many academic and business economists who have more freedom to speak their minds suffer the same deficiency. They treat every potential recession as a policy failure when it is often simply part of the business cycle. They thus contribute to a political climate that, focused on avoiding or minimizing any recession, may perversely aggravate inflation and lead to much harsher recessions later.

For the rest of this insightful dialogue, click here.

Another interesting treatise on how current monetary policy is not addressing the real issue is provided by Allan Meltzer, the eminent economist and monetary historian, who thinks the Fed is repeating the mistakes of the 1970s. Click here.

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