Tuesday, December 11, 2012

There are two kinds of people in the world: Those for whom everything revolves around inflation, and those who are not fools.

Kling: "In 2011, the Federal Reserve bought 77 percent of new debt issued by our government. We are already resorting to inflationary finance."


Some people think a little more inflation would be a good thing. I don't. But I do think inflation is a useful and highly significant concept. Inflation helps me think about the economy. Sometimes I like to lay things out such that inflation is one of the possible outcomes, because sometimes inflation *is* one of the possible outcomes.

Often when I lay things out that way, I get a reaction I don't expect. People seem to object to the discussion of inflation. To me, that reaction is way off base. But after reading the post by Arnold Kling, I get where that reaction is coming from.

For Kling, for the readers for whom Kling is writing, inflation is the center of the universe. Everything revolves around inflation in the story Kling tells.

It is a story not worth reading.

For an alternative explanation of the Fed's purchase of government debt, please see my previous post.

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