Low inflation is only a bad thing if you plan on blowing big debt bubbles up in sequence, it hurts most people to have their money constantly losing value. I'm really sick of inflation being considered a good thing.
Unemployment, poverty and wealth distribution are much more meaningful indicators of economic health or the lack thereof in my opinion.
The usual reason it's considered bad is that it indicates overcapacity in the economy relative to demand, and thus tends to go along with unemployment, etc.
There are important implications for the global economy. A protracted shortfall of the world’s biggest consumer, as well as weakness in Japan and debt-ravaged Europe, spells lasting pressure on external demand for export-led economies. Barring a quick rebalancing towards internal demand, so-called growth miracles in the developing world could be in for a rude awakening.
Low inflation is only a bad thing if you plan on blowing big debt bubbles up in sequence, it hurts most people to have their money constantly losing value. I'm really sick of inflation being considered a good thing.
ReplyDeleteUnemployment, poverty and wealth distribution are much more meaningful indicators of economic health or the lack thereof in my opinion.
Adam:
ReplyDeleteThe usual reason it's considered bad is that it indicates overcapacity in the economy relative to demand, and thus tends to go along with unemployment, etc.
From an article in today's Globe and Mail by Stephen Roach (Yale, Morgan Stanley Asia):
ReplyDeleteThere are important implications for the global economy. A protracted shortfall of the world’s biggest consumer, as well as weakness in Japan and debt-ravaged Europe, spells lasting pressure on external demand for export-led economies. Barring a quick rebalancing towards internal demand, so-called growth miracles in the developing world could be in for a rude awakening.