I am a little bit surprised to see that inflation can actually benefit an economy growth. What some economists explain: "inflation is particularly valuable when the economy is weak. Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly", is a clear and logical process and Fed is doing good by maintaining a little inflation.
However, I disagree with some economists like Professor Rogoff suggesting that a little inflation is not enough and that the Fed should such use much more inflation. An excessive inflation is really bad for the economy espacially with people earning fix incomes.
I am a little bit surprised to see that inflation can actually benefit an economy growth. What some economists explain: "inflation is particularly valuable when the economy is weak. Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly", is a clear and logical process and Fed is doing good by maintaining a little inflation.
ReplyDeleteHowever, I disagree with some economists like Professor Rogoff suggesting that a little inflation is not enough and that the Fed should such use much more inflation. An excessive inflation is really bad for the economy espacially with people earning fix incomes.