Framing the Dialogue

Low Inflation…Apparently Is A Bad Thing

influshionLow Inflation…Apparently Is A Bad Thing?  According to the headline in my local paper;

Low inflation’s ugly side? Weak economy

The headline is a link to the full article, but here are a few “precious” quotes from the article…Sorry to Adam Smith;

what the global economy could use right now is a dose of higher prices.” [perhaps the authors have not ridden to the gas pumps or shopped at the grocery store lately]

What’s wrong with very low inflation?  Lots. When prices barely move, many people postpone purchases. Why rush, if the same price — or lower — will be available in six months? Collectively, these delays slow consumer spending, the economy’s main fuel.” [perhaps, just perhaps folks’ wages have also been stagnant and insecure]

Apart from the government’s broad inflation gauges, many items have gotten much costlier during the past five or 10 years.”  [Wait…I though there was low inflation?]

Low inflation helps when pay increases are weak. Consumers can stretch their dollars.”  [Which is the case]

But if retailers could raise prices, say, 3 percent or 4 percent, the extra revenue would allow them to pay employees more. And they wouldn’t have to rely strictly on cost cuts to deliver profits. “  [Right they could increase the prices for goods.  That wouldn’t push for other businesses to do the same so that their workers could now afford to pay higher prices…would it?  History only confirms that this is the way it works.  It is hard to read this drivel that is presented as “economics.”]

And finally…

Higher inflation would even make it easier for Americans to manage their debts. Laurence Ball, an economics professor at Johns Hopkins, noted that many car buyers have loans with rates of 2 percent or less. If inflation were 3 percent or more, pay would likely rise. The car loans would become cheaper to pay off. ”  [Yeah!  We can pay off our debts easier because our money is worth less!  Wait, doesn’t that mean our bread and milk will cost more?  and gas? and shoes? and everything else?]

The folks who wrote this and those who were quoted and those who edited this and those who published this need to learn this phrase, “on the other hand.”

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