Inflation DA - 7wk

8/10/2019 Inflation DA - 7wk

1/80

Inflation DA Sanchez/Alderete

***FILE EXPLANATION***....................................................................................................................................1

***SHELL***........................................................................................................................................................... 41NC Inflation........................................................................................................................................................ 5

***UNIQUENESS***...............................................................................................................................................8Bin!"....................................................................................................................................................................... #Uni$%&n&"" ' Inflation........................................................................................................................................... 1(Uni$%&n&"" )a&".............................................................................................................................................. 1+Uni$%&n&"" ' ,o-t............................................................................................................................................. 1/Uni$%&n&"" Ca0ital Flit...................................................................................................................................14Uni$%&n&"" Con"t%tion In2%"t3.....................................................................................................................15Uni$%&n&"" ' Un&0lo3&nt................................................................................................................................1

***LIN6S***.......................................................................................................................................................... 1#Lin!" ' Hi S0&&2 7ail.........................................................................................................................................+(Lin!" ' Pot S&%it3..............................................................................................................................................+1Lin!" ' Hi-a3 Bill..............................................................................................................................................++Lin!" ' Pi0&lin&"....................................................................................................................................................+/

Lin!" Fi"al Sti%l%".........................................................................................................................................+Lin!" E0lo3&nt.............................................................................................................................................+Lin!" ' ,o-t......................................................................................................................................................./(

Int&nal Lin!" ' Union"........................................................................................................................................./+Int&nal Lin!" )a& Inflation............................................................................................................................/4Int&nal Lin!" Int&&"t 7at&"............................................................................................................................./

***I9PACTS***..................................................................................................................................................... /#Inflation I0at" ' Eono3.................................................................................................................................4(

AT: ;T%n .........................................................................................................4#AT: ;Inflation "o Lo- No- No Int&nal Lin!>................................................................................................... 5(AT: ;O=aa@" Sti%l%" Pa!a& )o!&2>............................................................................................................. 51AT: ;Inflation &l0" ,o-t>................................................................................................................................. 5+AT: ;H&l0" t& Eono3 Lon T&>................................................................................................................... 5/AT: ;)& 2on@t %"& Union La=o>........................................................................................................................... 54AT: ;F&2&al 7&"&& an C&! Inflation>........................................................................................................... 55

***ON CASE E7SION***....................................................................................................................................5

1NC Sti%l%" A2anta&....................................................................................................................................58''Et. St%t%al 7&fo........................................................................................................................................4''Et. B%==l&"........................................................................................................................................................ ''Et. In&"t&nt Ta2&'Off..................................................................................................................................8''Et. Alt&nat& Ca%"& ' ?&=t.................................................................................................................................1''Et. 6&3n&"iani" Fla-&2..................................................................................................................................+''Et. No N&t ,ain.................................................................................................................................................4''Et. E0iiall3 Fail&2........................................................................................................................................''Et. Alt&nat& Ca%"& ' E%o0&.............................................................................................................................8


2/80


3/80

Ho- to U"& ti" Fil&:

If t&3 2on@t a& an &ono3K"ti%l%" a2anta&D t&n 3o% an %n t& 2i"a2 off a"&. Po=" -on@t a00&noft&n if t&3 2on@t a& an &ono3 a2anta&D o22" a& t&3 2on@t i& an3 0&o0l&.

If t&3 a& an &ono3K"ti%l%" a2anta&D 3o% a& t-o o0tion" 7%n it off a"& a" a 2i"a2D o to %n it ona"& a" a t%n to t&i a2anta&. &&=& no 2o%=l& t%n" 3o% annot "a3 tat 0lan 2&&a"&" o=" -itti" 2i"a2J. T& Off Ca"& &"ion a3 a!& t& 2&=at& ;Cl&an&> =3 oaniin it -&ll t& On Ca"& &"ion i"

% o& In ?&0t it o&" into all of t& -a3" in -i inflation %t" t& &ono3 an2 2i"tot" t&"ti%l%" it 2o&" ti" =3 not ain Initial lin!" t& Aff -ill al&a23 =& "a3in tat t&3 in&a"& &0lo3&ntan2 2&an2J o t&inal i0at" to"& a& al"o in t& 1ACJ. Ti" 0at of t& fil& al"o a" a Lot of &n&al;6&3n&"iani" )onKFail"> an2 ;Sti%l%" Fail"> a2" in it -& o%l2n@t &l0 oin ao"" a tonn& ofto"&D an2 t&3 a& all int&&lat&2 an3-a3.

T& Affiati& fil& i" 0&tt3 "tan2a2D &&0t tat t& t%n" to t& 2i"a2 a& o"tl3 a2& %0 of t&


4/80

***SHELL***


5/80

1N Inflation

A! "ni#$ene%% the Econo&' i% i&(ro)in %lo+l' no+ , inflation i% c$rrentl' lo+- ande&(lo'&ent i% ro+in %lo+l'

.ellen- $ne 010, 2ice hair of the Federal 3e%er)e D A&""&2 K+1K1+Dtt0:KK---.f&2&al&"&&.oKn&-"&&nt"K"0&&K3&ll&n+(1+((a.t

In 3 &a!" tonitD I -ill 2&"i=& 3 0&"0&ti& on on&ta3 0oli3. To =&inD o-&&D Ill ilit "o& of t& %&nt on2ition" an2 !&3 f&at%&" of t& &onoi

o%tloo! tat "a0& 3 i&-". To antii0at& t& ain 0oint"D t& &ono3 a00&a" to =& &0an2in at a o2&at& 0a& . T&%n&0lo3&nt at& i"alo"t 1 0&&nta& 0oint lo-& tan it -a" a 3&a aoD =%t -& a& "till fa fo f%ll &0lo3&nt. Loo!in a&a2D I antii0at& tat "inifiant &a2-in2" -ill ontin%& to &"tain t& 0a& of t& &o&3 "o tat t& &ainin &0lo3&nt a0 i" li!&l3 to lo"& onl3 "lo-l3.Att& "a& ti&D inflationa="tatin fo t& tan"ito3 &ff&t" of o&&nt" in oil 0i&"J a" =&&n %nnin n&a + 0&&nt o& t&0a"t t-o 3&a"D an2 I &0&t it to &ain at o =&lo- t& F&2&al O0&n 9a!&t Coitt&&" t& FO9C"J +0&&nt o=&ti& fo t& fo&"&&a=l& f%t%& .A" al-a3"D on"i2&a=l& %n&taint3 att&n2" t& o%tloo! fo =oto-t an2 inflation &&nt" o%l2 0o& &it& o& 0o"iti& o n&ati& tan -at I "&& a" t& o"t li!&l3 o%to&. Tat "ai2D a" I

-ill &0lainD I on"i2& t& =alan& of i"!" to =& tilt&2 to-a2 a -&a!& &ono3.

4! Lin5% , Sti&$l$% %(endin to ra(idl' e6(and e&(lo'&ent %(ar5% r$na+a' inflation e&(iricall' 7e'ne%ian %(endin de%tro'% confidence in the econo&'

8e+en- 09, Editor at The Ne+ .or5 Ti&e% Ba3D 11K1/K(8D ;T& O&loo!&2 Eonoi Ci"i"D Infl%&ntial Still>D T& N&- 7&0%=liDA&""&2 K+(K1+D tt0:KK---.n3ti&".oK+((8K11K14K=oo!"K14=oo!.tl

In 1# t& Con"%& Pi& In2& o"& =3 4.# 0&&nt o& t& n&t f&- 3&a" it li=&2 "t&a2il3 %ntil it&a&2 2o%=l& 2iit"D 1/./ 0&&nt in 1## an2 1+.5 0&&nt in 1#8(.An2 -it t&"& i"in 0i&"D 0o2%tiit3 2&lin&2D "tan2a2" ofliin f&llD in&"to" fl&2 t& "to! a!&tD 2&=t i"&" follo-&2 on& %0on anot&. Alo"t &&3on& -a" aff&t&2D an2 not %"t in t&i -all&t" an2 =an! ao%nt". A" & -it&"D ;

T& &ono3@ i" al"o a "oialD 0olitial an2 0"3oloial 0o&""D> an2 t& ,&at InflationD & &0lain"D 2i2 &al 2aa& to t& A&ian0"3&D &n&n2&in a f&&lin of o0&l&""n&""D a%"in iti&n" to lo"& onfi2&n& in t&i 0olitial an2&onoi in"tit%tion".An inflationa3 0"3olo3 too! ol2D &atin a "&lf'f%lfillin 0o0&3 a" -a&" a"&20i&" in an && o& 2&"t%ti& 3l&. ;In all of A&ian i"to3D> 9. Sa%&l"on -it&"D ;ti" inflation a2 no o0aa=l& 0&&2&nt.> An2 -o -a"to =la& fo ti" %n0aall&l&2 2i"%0tionD ti" "3"t&'t&at&nin "tat& of affai"M Ao2in to 9. Sa%&l"onD -& all -&&. Poo Po""% "ai2D ;)& a& &t t& &n&3 an2& i" %".> 9. Sa%&l"on "a3" "o too. Hi" tal& of %l0a=ilit3 =&in" at t& &n2 of )ol2 )a II. )it t& ?&0&""ion a &&nt &o3D A&ian" &nt&&2 0&a&ti& -oi&2a=o& all a=o%t t& &t%n of -i2&"0&a2 o=l&""n&"". In 1#4 Ha3 S. T%an 2&la&2D ;T& o= to2a3 i" to "&& to it tat A&ia i" not aa&2 =3 &%in 2&0&""ion" an2lon 0&io2" of %n&0lo3&nt.> ?-it ?. Ei"&no-& a&&2. B%t it -a" %n2& A&2 -it t& tool" of 6&3n&"iani"D 6&nn&23@" t&a of &onoi a2i"&" =&li&&2 t&3o%l2 fin&'t%n& t& &ono3D ontollin =%"in&"" 3l&" an2 &liinatin t& 0o""i=ilit3 of &&""ion. L3n2on B. B%t in an at of &n%in& 0olitial o%a& 7&aan 0&"&&&2D an2 9. Sa%&l"on onl%2&"D ;Of all 7&aan@" &onoi ai&&&nt"D>i" "%&""f%l =attl& aain"t inflation ;-a" t& o"t 2&finiti&. T& &"t of i" &onoi &o2 -a" i&2.> Aft& ti" "tiin 2&"i0tion oft& i 2aa of t& &al3 @8("D t& &ain2& of ;T& ,&at Inflation an2 It" Aft&at> i" an antilia. In fat t& naati& 2i""ol&". In =inin i" "to3 2o-n to t&0&"&ntD 9. Sa%&l"on i2&ntifi&" %&nt &onoi 0o=l&" an2 0o0o"&" "ol%tion". So& of i" a%&nt" a& i&f%ta=l&D if failia: t& o%nt3 i" oin to a& to fin2 a

-a3 of &foin Soial S&%it3 an2 9&2ia&. B%t fo t& o"t 0at & &t" lo"tD an2 lo"&" i" &a2&"D in a oa"" of on t& on& an2D on t& ot&. )& "o%l2 ti =a! t&-&lfa& "tat& R =%t -& "o%l2 al"o -o3 a=o%t fain&"". )& "o%l2 2&al -it t& 0o=l&" of lo=aliation R =%t on"&n"%" -ill =& 2iffi%lt to ai&&. T& final ti2 of 9.Sa%&l"on@" =oo! a" non& of t& "-&&0 an2 lait3 of t& &ali& "&tion".

! I&(act% , Inflation +o$ld 5ill the reco)er' it co&(o$nd% econo&ic fear% and in)e%tor$ncertaint'

The :a%hinton Po%t 010- "taff -it& 7o=&t


6/80

It" a "in of 2&"0&ation tat t& lat&"t %& =&in "%&"t&2 fo t& ailin &ono3 i" i& inflation . In t&1#(" an2 &al3 1#8("D inflation0&a!in at 1/ 0&&nt in 1## an2 1#8(J -a" a national %"&. No-D it" =&in a2an&2 a" ananti2ot& to i %n&0lo3&nt an2 &a& &onoi o-t.It" =a2 a2i& fo t& F&2&al 7&"&&D -i ol2" it"ann%al &"&a &t&at at


7/80


8/80


9/80

4rin5%

On the =rin5 of Staflation inflation i% lo+ no+- =$t an' &ore co$ld ca$%e econo&ic%tanation

:orah 010 for&er re%earch a%%ociate at the "ni)er%it' of alifornia- 4er5ele'9ii P. ar5et S5e(tic%Ei ?& 15D Ho- ?&flation C&at&" H30&'inflation Eonoi" K H30&Inflation 9a!&tOal&

tt0:KK---.a!&toal&.o.%!KAtil+.tl

US "tan2" on t& && of 30&inflation,ol2 Ba!-a2ation "inal" tat t& n&t 0a"& of t& &onoi i"i"D a a0i2a&l&ation in t& &loit3 of on&3D i" a=o%t to =&in. 7it no-D t& flo- of on&3 to% t& &ono3 i"

=a"iall3 fo&n: &&3on& i" 0ani!in into t&a"%i&" 2%& to 2&flation f&a". N&ati& 3i&l2" on t& / ont t&a"%i&" a& a "in ofti". ?&"0it& t& laial at& on&3 i" oin to% t& &ono3D t& 2olla a" "tat&2 to fall aain D an2 ol2 a"

=&%n to all3. A" ti" ontin%&"D in&"to" -ill =&in to $%&"tion" t& "af&t3 of t&a"%i&"D an2 "&ll t& off. T& on&3 oin o%t of t&a"%i&" -illa22 f%&l tool2" i"& an2 t& 2olla" fall. On& t& 2olla it" n&- lo-"an2 ol2 =&a!" onininl3 o& 1(((D In&"to" &0&tin 2&flation

-ill =&in to 0aniD an2 a floo2 of on&3 -ill o& o%t of t&a"%i&". It i" t&n tat 30&inflation -ill =&in in &an&"t.
http://www.pimco.com/EN/Insights/Pages/Why-Inflation-Could-Rise-Over-the-Long-Term.aspxhttp://www.marketoracle.co.uk/Article7792.htmlhttp://www.pimco.com/EN/Insights/Pages/Why-Inflation-Could-Rise-Over-the-Long-Term.aspxhttp://www.marketoracle.co.uk/Article7792.html


10/80

"ni#$ene%% , Inflation

Inflation and +ae% are %ta=le and lo+ ne+e%t econo&ic data (ro)e%

.ellen- $ne 010 , 2ice hair of the Federal 3e%er)e D A&""&2 K+1K1+Dtt0:KK---.f&2&al&"&&.oKn&-"&&nt"K"0&&K3&ll&n+(1+((a.t

T%nin to inflationD fi%& / "%ai&" 0iat& an2 FO9C fo&a"t". O&all on"%& 0i& inflation a" fl%t%at&2 $%it& a =it in &&nt 3&a"D la&l3 &fl&tin o&&nt"

in 0i&" fo oil an2 ot& oo2iti&". In &al3 +(11 an2 aain &ali& ti" 3&aD 0i&" of %2& oilD an2 t%" of a"olin&D o"& noti&a=l3. Sootin to%t&"& fl%t%ation"D inflation a" &a"%&2 =3 t& 0i& in2& fo 0&"onal on"%0tion &0&n2it%&" PCEJ

a&a&2 n&a + 0&&nt o& t& 0a"t t-o 3&a" . In &&nt -&&!"D o-&&D oil an2 a"olin& 0i&" a& o2&at&2 an2 a& no- "o-in to% tot& &a2lin& inflation fi%&". Loo!in a&a2D o"t FO9C 0atii0ant" at t& ti& of o% A0il &&tin &0&t&2 inflation to =& atD o a =it =&lo-D o% lon'%n o=&ti& of +0&&nt to% +(14 0iat& fo&a"t&" on a&a& al"o &0&t inflation to =& lo"& to + 0&&nt. A" -it %n&0lo3&ntD %n&taint3 ao%n2 t& inflation 0o&tion i"

"%="tantial. In t& i&- of "o& o="&&"D t& "ta=ilit3 of inflation in t& fa& of i %n&0lo3&nt in &&nt 3&a"on"tit%t&" &i2&n& tat % of t& &ainin %n&0lo3&nt i" "t%t%al an2 not 3lial. T&3 &a"on tat if t&&

-&& t%l3 "%="tantial "la! in t& la=o a!&tD "i0l& a&l&ationi"t VPilli0" %&V o2&l" -o%l2 0&2it o& noti&a=l& 2o-n-a2 0&""%& on inflation. Ho-&&D"%="tantial o""'o%nt3 &i2&n& "%&"t" tatD in lo-'inflation &nion&nt"D inflation i" nota=l3 l&"" &"0on"i& to 2o-n-a2 0&""%& fo la=o a!&t "la! tan i t i"

-&n inflation i" &l&at&2. In ot& -o2"D t& "ot'%n Pilli0" %& a3 flatt&n o%t.5 On& i0otant &a"on fo ti" non'lin&ait3D in 3 i&-D i" 2o-n-a2 noinal -a&ii2it3''tat i"D t& &l%tan& o ina=ilit3 of an3 fi" to %t noinal -a&". T& "oli2 =l%& =a" in fi%& 4 0&"&nt a "na0"ot of t& 2i"ti=%tion of noinal -a& an&"fo in2ii2%al o=" 2%in t& 2&0t of t& %&nt la=o a!&t "l%0D =a"&2 on 2ata oll&t&2 =3 t& B%&a% of La=o Stati"ti". Fo o0ai"onD t& 2a"&2 &2 lin&

0&"&nt" a 30ot&tial 2i"ti=%tion of -a& an&"D %"in a noal 2i"ti=%tion tat a00oiat&" t& at%al 2i"ti=%tion of -a& an&" &at& tan &o. T&2i"ti=%tion of at%al -a& an&" "o-" tat a &lati&l3 i 0&&nta& of -o!&" "a- no an& in t&inoinal -a&D an2 &lati&l3 f&- &0&i&n&2 o2&"t -a& %t". Ti" 0il&'%0 0&no&non at &o "%&"t"tatD &&n -&n t& %n&0lo3&nt at& -a" ao%n2 1( 0&&ntD an3 fi" -&& &l%tant to %t noinal -a&at&".In t& a="&n& of ti" =ai&D noinal ain" in -a&" an2 %nit la=o o"t" -o%l2 a& li!&l3 =&&n &&n o& "%=2%&2 i&n t& "&&it3 of t& &onoi 2o-nt%nD

-it t& &"%lt tat inflation -o%l2 0o=a=l3 no- =& %nnin at a lo-& at&.

Inflation i% &oderate no+ Federal 3e%er)e re(ort% (ro)e

Loan 010 hief Econo&i%t at HS4 6&inD


11/80

Inflation i% decrea%in =ond &ar5et% (ro)e

3$a=er- 010Ci"to0& Staff )it&D La" &a" S%nD


12/80

"ni#$ene%% :ae%

:ae% are decrea%in lo=alization and declinin $nion%

3eich- 010 (rof of ($=lic (olic' at 4er5ele'7o=&t (K1+K+(1+ :(+ 0D ;)3 T& Eono3 Cant ,&t O%t of Fi"t ,&a>tt0:KK---.%ffinton0o"t.oKo=&t'&iKon"%&'"0&n2in'&onoi'&o&3=15#1454.tl

Can I "a3 ti" an3 o& "i0l3M T& &anin" of t& &at A&ian i22l& la"" f%&l&2 t& &at A&ian &0an"ion fo t&& 2&a2&" aft& )ol2 )a II. T&i &lati& la!

of &anin" in o& &&nt 3&a" "&t %" %0 fo t& &at A&ian =%"t. Statin ao%n2 1#8(D lo=aliation an2 a%toation =&an&&tin 2o-n-a2 0&""%& on &2ian -a&". E0lo3&" =&an =%"tin %nion" in o2& to a!& o& 0ofit".

An2 in&a"inl3 2&&%lat&2 finanial a!&t" =&an ta!in o& t& &al &ono3 T& &"%lt -a" "lo-& -a&o-t fo o"t o%"&ol2". )o&n "%&2 into 0ai2 -o! in o2& to 0o0 %0 fail3 ino&" '' -i &l0&2 fo a ti&. B%t t& &2ian -a& !&0tflatt&ninD an2 t&nD aft& +((1D =&an to 2&lin&. Ho%"&ol2" ti&2 to !&&0 %0 =3 oin 2&&0l3 into 2&=tD %"in t& i"in al%&" of t&i o&" a" ollat&al. Ti" al"o &l0&2 ''fo a ti&. B%t t&n t& o%"in =%==l& 0o00&2.

:ae Inflation i% $nder control late%t fi$re% (ro)e!

8roo& 011, 4$%ine%% Editor Financial Ti&e%BianD D Piat& "&to 0a3 2&al" i"& "a0l3 to +.8D Finanial Ti&".oD 9a /D+(11D Po$%&"t


13/80

"ni#$ene%% , 8ro+th

The econo&' i% ro+in %lo+l' lo+ ho$%ehold %(endin

Loan 010 hief Econo&i%t at HS4 6&inD


14/80

"ni#$ene%% a(ital Fliht

No ca(ital fliht, >an$fact$re% co&in =ac5 d$e to ri%in +ae% in hina and India

8$lani 10 , F$ll ti&e In)e%tor Ana2D ;Inflation: T& N&t Ci"i"D An2 Ho- To Pot&t Go% In&"t&nt">D


15/80

"ni#$ene%% on%tr$ction Ind$%tr'

on%tr$ction co&&odit' (rice% are %ta=le no+ onl' &oderate (rice increa%e%

Dail' o&&ercial Ne+% and on%tr$ction 3ecord 010!


16/80

"ni#$ene%% , "ne&(lo'&ent

"ne&(lo'&ent i% increa%in ne+e%t la=or re(ort% (ro)e

.le%ia%- 010 =loer for Thin5Prore%%9att&-


17/80


18/80


19/80

***LIN7S***


20/80

Lin5% , Hih S(eed 3ail

3ail+a' o=% increa%e +ae% $nion% de&and hiher (a' and =enefit%

>ica 011- hair&an of the co&&ittee of tran%(ortation and infra%tr$ct$re


21/80


22/80

Lin5% , Hih+a' 4ill

"nion% %$((ort the hih+a' =ill it +o$ld increa%e $nion o=%

4enni%h 010 St&& "taff -it& ?a3ton ?ail3 N&-" (/K(8K1+ Union %&" 0a""a& of i-a3 =ill Ca0ain in OioD 6&nt%!3 fo%"&" on 1(#B S&nat&&a"%&!-tt0:KK---.2a3ton2ail3n&-".oK=%"in&""K%nion'%&"'0a""a&'of'i-a3'=ill'1/4(85(.tlD (K+1K1+J

A i-a3 on"t%tion %nion i" ollin o%t a t-o'"tat& a0ain o0l&t& -it 1((D((( o! -anin0a0l&t" an2 a ;E&&n3 Bi2& 7&0ai T&a> flat=&2 t%! loa2&2 -it a iant oll of 2%t ta0& R all to%& Con&"" to 0a"" a lon't& i-a3 =ill. T& a0ain i" onl3 in 6&nt%!3 an2 Oio an2 i" fo t& 5((D((('&=& La=o&"@Int&national Union of Not A&ia. It follo-" la"t ont@" 14'it3 to% -it a "to0 in ?a3ton =3 t& U.S. Ca=& of Co&& tat al"o %&2 0a""a&. T& %nion"ai2 t& 1(# =illion S&nat& i-a3 =ill -o%l2 !&&0 in&"t&nt l&&l fo t-o 3&a". T& %nion a0ainta&t" 7&0%=lian l&a2&"i0 in Con&"" R S0&a!& of t& Ho%"&


23/80

Lin5% , Pi(eline%

"nion% %$((ort (i(eline con%tr$ction the' are $nion o=%

8oode 010 , Senior ener' and en)iron&ent re(orter for Politico ?a&nD 1K+(D a2%at&2 fo %ni&"it3 of ,&oia-it a 2&&& in o%nali"D 6&3"ton& 0i0&lin& "0a!" la=o iil -aD tt0:KK---.0olitio.oKn&-"K"toi&"K(11+K1//.tlJ

;P&o0l& a& 0i""&2D> "ai2 on& U.S. la=o offiial -o "%00ot" t& 0o0o"&2 Tan"Cana2a 0i0&lin&. ;T& &otion" a&&all3D &all3 a- it no-. Ti" i" a =i 2&al.V ;It@" &0%l"i&D it@" 2i"%"tin an2 -&@& not oin to "tan2 i2l3 =3D> La=o&"@ Int&national Union of Not A&ia ,&n&alP&"i2&nt T&3 O@S%llian tol2 POLITICO. ;T& %l&" a& an&2. So -&@ll &at ao2inl3.> O@S%llian "ai2 t& fi"t o& -ill =& to 0%ll i" %nion o%t of t& Bl%&,&&n

Allian& R a oalition of &nion&ntal o%0" an2 la=o %nion" tat &0&"&nt&2 n&al3 all of t& o%0" tat "in&2 a oint "tat&&nt =a!in O=aa. T& Bl%&,&&nAllian& it"&lf 2i2 not ta!& a 0o"ition on t& 0i0&lin&.J ;Union" an2 &nion&ntal o%0" tat a& no &$%it3 in t& -o! a& !i!&2 o% &=&" in t& t&&tD> O@S%llian"ai2. ;An2 an& i" an %n2&"tat&&nt a" to o- -& f&&l a=o%t it. )&@& not "ittin at t& "a& ta=l& a" 0&o0l& tat 2&"to3 o% &=&"@ li&".> S&&al %nion" tat a2 not0&io%"l3 "ta!&2 o%t a 0%=li 0o"ition on t& 0i0&lin& R inl%2in t& S&i& E0lo3&&" Int&national UnionD t& Unit&2 A%to-o!&"D t& Unit&2 St&&l-o!&" an2 t&Co%niation" )o!&" of A&ia R oin&2 t& Si&a Cl%= an2 Nat%al 7&"o%&" ?&f&n"& Co%nil in "inin t& "tat&&nt. )&2n&"2a3@" "tat&&nt a& aft& &at&2

2i"%""ion" in t& la=o o%nit3D a" %nion" =a!in t& 0i0&lin& ti&2 to onin& to"& tat a2 not ta!&n a 0%=li0o"ition 3&t to =a! off fo 2oin "o.T& &""a& -a" =l%nt: )& 2on@t &t inol&2 in 3o% =%"in&"" 3o% "o%l2n@t &t inol&2 in o%". ;It@" t&&$%ial&nt of %" "t&00in in -&n t&3 -&& 2oin t& =ailo%t of ,&n&al 9oto" an2 "a3in ti" i" =%ll"RD@> a0o'0i0&lin& la=o offiial "ai2. ;No=o23 -ant" to "t&0 %0 to &l0 %". O %"t "ta3 "il&nt an2 l&t %" fit o%

=attl&".> B%t t& %nion" -o "in&2 t& oint "tat&&nt "ai2 it -a" t& it tin to 2o an2 -a" n&&""a3 to &l0 O=aa f&n2 off 7&0%=lian atta!" o& i" o=" &o2.;)&@& -o!&2 -it Si&a Cl%= an2 t& ot&" fo a lon ti& an2 -& ai"&2 t& i""%&" a=o%t t& 30oi"3 of t& 7&0%=lian" in o% "tat&&ntD> Co%niation" )o!&"of A&ia "0o!&"-oan Can2i& It al"o o&" aft& 7&0%=lian" fo a!in ;a3nial o&> =3 &$%iin a &2it in a liit&2 ti& fa& an2 li"t" O=aa'=a!&2 o=" initiati&" tat t& %n2&"in&2 o%0" ont&n2 7&0%=lian" a& o00o"&2. Ti"

onta"t&2 "a0l3 -it i&" fo %nion" "% a" t& B%il2in an2 Con"t%tion Ta2&" ?&0at&nt of t& AFL'CIO tat"%00ot t& 0i0&lin& an2 "ai2 O=aa a2& t& -on all.

Infra%tr$ct$re %ti&$l$% increa%e% inflation =eca$%e (ro&otin $nion o=% ca$%e% +ae ro+thand %taflation

ontinetti- 09, Editor,in,chief of The :a%hinton Free 4eacon 9att&-D H&& T&3 Co&D T& )&&!l3 Stan2a214D Ot + +((8D 0o$%&"tD "ai2 C)A@" & "ai2


24/80


25/80


26/80

Lin5% Fi%cal Sti&$l$%

7e'ne%ian %(endin cr$%he% the econo&' it ca$%e% h'(erinflation e&(iricall' (ro)en

Da)i%- 01 editor of Phil% Stoc5 :orld Pil. tt0:KK"&&!inal0a.oKin"ta=loK+84'0ili0'2ai"K541+'a22itional'o&nta3'on'a3&!'"'!&3n&"A22itional Co&nta3 on Ha3&! " 6&3n&"


27/80


28/80

%n&0lo3&nt =&n&fit" 0olii&"D 2&oa0i an&" an2 Fi&2an@" at'all at&o3 of "o on@ a& 0ot&ntial "t%t%al "o%&" of an&" in %n&0lo3&nt. Fi%& 1ill%"tat&" t& ti& 0att&n" of t& %n&0lo3&nt at&" fo t& Unit&2 Stat&"D OEC? E%o0&D an2 A%"talia fo 1#( to 1##.

3ed$cin $ne&(lo'&ent increa%e% inflation e&(irical e)idence (ro)e%

7atz ;9 Profe%%or of econo&ic% at Har)ard La-&&n& F.D Dtt0:KK---'o.=a.o.a%K0%=liation"Konf"K1##8Konf'ol'1##8.02f[0a&\/4 (K1#K1+ ,ool& SolaJ

T& &t&nt to -i inflation a&l&at&" -&n %n&0lo3&nt i" lo- an2 2&&l&at&" -&n t& at& i" i i"f%t& ill%"tat&2 fo t& Unit&2 Stat&" in Fi%& +. Follo-in Stai&D Sto! an2 )at"on 1##JD -& 0lot t&

an& in inflation %"in t& ain'-&it&2 ,?P 2&flatoJ on %n&0lo3&nt in t& 0&io%" 3&a fo t& 0a"t +5 3&a" an2 t& OLS 0&2ition lin& fo t&&lation"i0. T& i0li&2 nat%al at& of %n&0lo3&nt i" .5 0& &nt o& ti" 0&io2. T& 0lot "o-" tatinflation t&n2" to a&l&at& in t& n&t 3&a -&n %n&0lo3&nt i" =&lo- t& &"tiat&2 ti&'inaiantJnat%al at& # o%t of 1+ o="&ation"J an2 t&n2" to 2&&l&at& -&n %n&0lo3&nt i" a=o& ti"%n&0lo3&nt l&&l # o%t of 1/ o="&ation"J . Inflation 2&&l&at&2 in 1## an2 1## 2&"0it& $%it& lo- %n&0lo3&nt at&" in t& 0&io%" 3&aDf%t& "%&"tin a 2&lin& in t& US nat%al at& in t& 1##(" o "o& fao%a=l& tan"ito3J "%00l3 "o!" ,o2on 1##=J. On& an 2o "o&-at =&tt&

-it o& "o0i"tiat&2 o2&l"D o -it a 2&oa0iall3 a2%"t&2 %n&0lo3&nt at&. StillD t& nat%al at& 30ot&"i"-it a &a"ona=l3 "ta=l& NAI7U an2 3lial fl%t%ation" in %n&0lo3&nt ao%n2 t& NAI7U "&&" to -o! fail3 -&ll fo t& Unit&2 Stat&". B%t t& &0&i&n&of t& 0a"t f&- 3&a" of ontin%&2 2&lin&" in %n&0lo3&nt =&lo- 0&io%" &"tiat&" of t& NAI7U t30iall3 0& &nt o i& in t& &al3 1##("J -it no a&l&ation in inflationD ai"&" t& i""%&" of -at a00&a" toa& a%"&2 a &&nt 2&lin& in t& US nat%al at& of %n&0lo3&nt.

"ne&(lo'&ent %lo+% inflation other nation% (ro)e

7atz ;9 Profe%%or of econo&ic% at Har)ard La-&&n& F.D Dtt0:KK---'o.=a.o.a%K0%=liation"Konf"K1##8Konf'ol'1##8.02f[0a&\/4 (K1#K1+ ,ool& SolaJ

Ti" loi a" otiat&2 t& anal3"i" fo &0lanation" =a"&2 on 3"t&&"i"@ t& notion tat t& i"to3 of %n&0lo3&nt it"&lf a3 a& lon'la"tin &ff&t" on t& nat%al

at& Blana2 1##1 Blana2 an2 S%&" 1#8J.aio%" "o!" to an3 OEC? &onoi&"D inl%2in t& oil "o!" of t&1#(" an2 tit on&ta3 0oli3 in t& 1#8("D l&2 to i %n&0lo3&nt. E&n aft& t&"& "o!" a2 0la3&2o%t =3 t& lat& 1#8("D "%"tain&2 i %n&0lo3&nt 2oinat&2 =3 lon't& %n&0lo3&nt tan"lat&2 into ai& nat%al at& of %n&0lo3&nt. T& 0&io2" of i %n&0lo3&nt -&& of "ot& 2%ation in t&Unit&2 Stat&"D an2 t& lo-& &n&o"it3 of %n&0lo3&nt =&n&fit" an2 lo-& in"i2& =aainin 0o-&D &antt& %n&0lo3&2 ontin%&2 to 0%t "ton 0&""%& on -a&'"&ttin in t& Unit&2 Stat&". A n%=& of 0ot&ntial ann&l" &i"tfo 3"t&&"i" in %n&0lo3&nt. A lon 0&io2 of i %n&0lo3&ntD 0ati%lal3 -&n %n&0lo3&nt =&n&fit" a& lon'la"tinD l&a2" to an in&a"& in t& 0o0otion of t&

lon't& %n&0lo3&2. Ti" 0att&n i" a00a&nt in t& 1#8(" in o"t o%nti&" -it 0&"i"t&nt i %n&0lo3&nt intot& 1##(". If t& %an a0ital of t& lon't& %n&0lo3&2 2&0&iat&" o if t&3 =&o& 2i"o%a&2 an2l&"" &ff&ti& in o= "&aD t&i i0at on -a& =aainin -ill 2&&a"&D l&a2in to an %0-a2 "ift of t&)KPJ " &lation an2 a i& nat%al at& of %n&0lo3&nt. Con&ntat&2 i at&" of o=l&""n&"" an2 0&&i&2 o &alJ la! ofo00ot%nit3 in t& l&itiat& la=o% a!&t a3 f%t& &o2& %an a0ital =3 in&a"&2 i& inol&&nt an2 2% %"&. T&"& an&" a3 a& lon'la"tin &ff&t" ao"" &n&ation" to% fail3 an2 n&i=o%oo2 &ff&t". Soioloial fato" a3 al"o&ff&ti&l3 in&a"& t& &"&ation -a& of t& %n&0lo3&2 =3 &2%in t& "tia of o=l&""n&"" an2 a!init o& a&0ta=l& to %tili"& =&n&fit" to t&i f%ll&"t Lin2=&! 1##5J. 9% &i2&n& i" "%&"ti& of "% "oial 3"t&&"i"@ &ff&t" inon&ntat&2 0o&t3 a&a" of US iti&" )il"on 1##J. T& &0iial a"& fo t&"& 3"t&&"i" &ani"" aff&tin t& &ol%tionof national %n&0lo3&nt at&" i" "o&-at a=i%o%". B%t Ball 1##J 0&"&nt" "ti!in &i2&n& tat to"& OEC? o%nti&" -it lon& ola& 2i"inflation"D &"0&iall3 to"& -it =ot lon 2i"inflation" an2 &n&o%" lon 2%ationJ %n&0lo3&nt =&n&fit"D &0&i&n&2 la& in&a"&" in t& nat%al at& of

%n&0lo3&nt fo 1#8( to 1##(. Un2& ti" "&naioD t& Unit&2 Stat&" &0&i&n&2 no in&a"& in t& nat%al at& of%n&0lo3&nt in t& 1#8(" =&a%"& of a "a0 =%t a0i2 2i"inflation in t& &al3 1#8(" an2 =&a%"& of "ot

2%ation %n&0lo3&nt =&n&fit" &2%in 3"t&&"i" &ff&t".+( La-&n& F. 6at

"ne&(lo'&ent 5ee(% +ae inflation lo+ direct relation%hi(

In)e%tor% hronicle ; ;Un&0lo3&ntD inflation an2 =on2"> No&=& 1/D +((#


29/80


30/80

Lin5% , 8ro+th

Onl' %lo+ ro+th can (re)ent a +ae,(rice %(iral, India (ro)e%

anannathan- 011 , f&r! Editor at 4$%ine%% Toda'7D 9a3 ' &2ito at -&= 18D f. E2ito at ?NAD B%"in&"" To2a3D B%"in&"")ol2D B%"in&"" Stan2a2D In2ian 9ana&&ntD an2 Finanial E0&""D Fi"t0o"tD a&""&2 K1#K+(1+D tt0:KK---.fi"t0o"t.oK&ono3Kin2ian'&ono3'i"'a%t'in't&'la""i'-a&'0i&'"0ial'18(.tl

Q%it& l&al3D a" -a&" !&&0 i"inD o& on&3 -ill =& "0&nt on foo2D 2iin %0 foo2 inflation. Ti" -ill "0% 2&an2fo i& -a&". N7E,A -a&" a& al&a23 in2&&2 to inflation. Ti" i" -&& t& 2&i"ion to ai"& 9SP -ill a22 f%&l to t& fi&. Con"i2&in t&

fat tat t& o&n&nt i" 3&t to ai"& 2i&"&l 0i&"D-& a& no-&& n&a t& &n2 of t& 0i&'i"& a&.)&& -ill it all &n2MA -a&'0i& "0ial annot ontin%& fo&& o -& -ill all 0i& o%"&l&" o%t of foo2 an2 n&&""iti&". T& onl3 -a3ti" i" oin to ool 2o-n i" to% "lo-& &onoi o-t. )il& offiial fo&a"t" a& "till tal!in of o-t in +(11'1+ "lo-in toao%n2 8 0&&ntD 9oan Stanl&3@" A"ia'Paifi Eonoi"t C&tan A3a "a3" i" oani"ation a" al&a23 %t o-t fo&a"t" t-i& foIn2ia an2 it no- "tan2" at . 0&&nt . So =att&n 2o-n t& at&". In2ia i" "lo-in 2o-n fo "%&.


31/80


32/80

Internal Lin5% , "nion%

Infra%tr$ct$re %ti&$l$% increa%e% inflation =eca$%e it =oo%t% %(endin and (ro&ote% $nion% thi% ca$%e% %taflation

ontinetti- 09, Editor,in,chief of The :a%hinton Free 4eacon 9att&-D H&& T&3 Co&D T& )&&!l3 Stan2a214D Ot + +((8D 0o$%&"tD c$lloch 11' Senior Polic' and Lei%lati)e Ad)ocate for the 4l$e8reen AllianceD 7o= 9C%lloD ;Union"ital to B%il2in Infa"t%t%&D> T& National


33/80

3oth 11' 3e%earch Fello+ at the Inde(endent In%tit$te- ,a=i&lD 7&&"


34/80

Internal Lin5% :ae Inflation

:ae inflation t$rn% &oderate inflation into %taflation , it o)er+hel&% e&(lo'&ent

Sinai- 9- chief lo=al econo&i%t at Deci%ion Econo&ic% D all&nD "tat&i"t an2 0&"i2&ntD 2&i"ion &onoi"D in. ;a -&a!&n&2&ono3: o- to &"0on2M> S&0t&=& #D +((8D %n& +1D +(1+D &ain =&fo& t& oitt&& on t& =%2&t o%"& of &0&"&ntati&"tt0:KK---.0oa&"".oKon&""Ko%"&K=%2&tKin2&.tlJ

T& 0att&n of &onoi o-t an2 inflationtat i" "o-in in t& U.S. an2 lo=all3 i" on& of "taflation. T& ]]StaflationFoot0int a00&a" in Ta=l& /D-it &&nt 0att&n" an2 &0&tation" of o-t an2 inflation "o-n fo "&&al !&3

o%nti&" an2 lo=al &ion". +((8:+ al&a23 i" &""&ntiall3 !no-nD in 0ati%la it%all3 all of at%al inflation. S&on2 $%at& &"%lt" on &al ,?P "till a& notaaila=l& fo a n%=& of o%nti&". )&a! &onoi o-t an2 i o i"in inflation &0&"&nt" t-o 0aa&t&" tat an2&fin& Staflation. Ot&" a& o=" an2 t& %n&0lo3&nt at& an2 t& 0&"&n& of 0a""'to% fo initial&o&no%"D o &n2o&no%"D "o%&" of inflation "% a" &n&3 inflationD -a&"D an2 nonla=o o"t". T& lon't&0&"&n& of i"in %2& oil 0i&" an2 lat&l3 foo2 0i&" al"o a& a!&" of StaflationD &tainl3 0&"&nt in ot&i"toial &0i"o2&" tat a& =&&n "o aat&i&2. C%2& oil 0i&"D on a&a&D a& =&&n i"in "in&1#K=a&l fo lit %2& in No&=& +((1 an2 0ati%lal3 "o o& t& 0a"t 3&a -&& t& in&a"&" 2o nota00&a to =& "ol&l3 &n2o&no%". Eatl3 -3 %2& oil 0i&" a& &&ntl3 i"&n "o faD "o fa"tD i" a 0%l&. B%tD t& &ff&t" on lo=al inflation an2 on t&inflation at&" of a la& n%=& of o%nti&" a& l&a in t& 2ata. In an3 o%nti&"D-a& inflation al"o i" a&l&atin. Ti" i" 0ati%lal3 t%&in t& &&in o 2&&lo0in -ol2D -&& =oo" a& o%&2 an2 %n&0lo3&nt at&" o&2 to &3 lo-l&&l". Co"t"'of0o2%tion a& i"in "a0l3 in t&"& o%nti&". An2D i&n t& lo=al nat%& of 0o2%tion an2 on"%0tionD a" -&ll a" t& a=ilit3 t&noloiall3to 0o2%&D 2i"ti=%t&D an2 "i0 alo"t an3-&&D t& 0i& an2 -a& inflation of t& &&in -ol2 %"t =&

&a2&2 a" a 0ot&ntial "o%& of inflation &&3-&&.A +ae (rice% %(iral ca$%e% r$na+a' inflation e&(irical e6a&(le% (ro)e

The Ne+ .or5 Ti&e% 9 Staff )it& LOUIS UCHITELLE A%%"t 1D +((8D A&""&2 L&i"

T& i""%& to =& 2&=at&2 =3 0oli3 a!&"D -o &&ntl3 fini"&2 "la"in int&&"t at&" in &"0on"& to t& &2it i"i" an2 t& &onoi 2o-nt%nD i" o- $%i!l3-a& 0&""%&" o%l2 &"%fa&. In t& F&2" 0la3=oo!D &0lo3&" -o%l2 ant ai"&" in &"0on"& to t& 0&""%& an2t&n "&&! to &o& t& o"t" of to"& ai"&" =3 a!in %0 0i&" fo a an& of &&32a3 it&". T&i 0i&in&a"&" -o%l2 =& follo-&2D aain ao2in to t& F&2" 0la3=oo!D -it anot& o%n2 of -a& in&a"&"D to =&follo-&2 in t%n =3 anot& o%n2 of 0i& in&a"&"D "&ttin off a -a&'0i& "0ial tat -o%l2 =& 2iffi%lt fot& F&2 to %n2o.


35/80

in&a"&" to ano inflationa3 &0&tation"D an2 Alan ,&&n"0anD i" "%&""o a" F&2 aianD &=a&2 it. So a" 9. B&nan!&. Fo it" 0atD t& 0%=li &0&t"inflation to "%="i2& -itin t& n&t fi& 3&a"D 2&"0it& t& %&nt oil an2 foo2 0i& "o!"D ao2in to t& 7&%t&"KUni&"it3 of 9iian S%&3" of Con"%&"D a

=ao&t& lo"&l3 -at&2 at t& F&2.


36/80

Internal Lin5% Intere%t 3ate%

Tihtenin of la=or force +ill lead to increa%ed intere%t rate% in an atte&(t to c$r= inflation

oo(er 0C


37/80

i0at 0&o0l&" 2&i"ion" n&ati&l3.V


38/80


39/80

***I>PATS***


40/80

Inflation I&(act% , Econo&'

H'(erinflation colla(%e% the econo&' it trier% a r$%h to co&&oditie%

Lira- 01, Freelance +riter for 4$%ine%% In%ider,onaloD 8K+K+(1(D ;H30&inflationD Pat II: )at It )ill Loo! Li!&>D ,onaloLiaD a&""&2 K+1K1+D tt0:KKonalolia.=lo"0ot.oK+(1(K(8K30&inflation'0at'ii'-at'it'-ill.tl

IfT&a"%i&" tan!D an2 t& a!&t" all =a&l into oo2iti&"D t&n 0i&" -ill i"& fo &%la on"%&" Rti" "o%l2 not =&a onto&"ial inf&&n&. )at -o%l2 on"%&" 2oD -it "%22&nl3 % i& a" 0i&"D an2 "oon % i& foo2 0i&"M Si0l&: T&3@ll =%"t o0&n t&i 0i3 =an!"D

-at"o&& to"& 0i3 =an!" it a00&n to =&: 4(1!J"D -at&& &$%iti&" t&3 it a&D &t. B%t if t& i& on"%& 0i&" ontin%&Ro =&o& -o"&R-at -ill

a00&n to t& /+( illionA&ian on"%&"M T&3@ll "tat =%3in o& a" no-D at& tan -ait ao%n2 fo tooo-Ran2 t& a!&t -ill&at to ti". Ho-M T-o -a3: Pi&" of oo2iti&" -ill i"& &&n f%t&Ran2 a""&t 0i&" -ill fall &&n lo-&. AainD t& anin t& 2&"&tD t& 2iaon2"D an2 t& -at&: IfA&ian on"%&"a& &ttin it at t& a" "tation an2 t& "%0&a!&tD t&3@ll "tat "&llin &&3tin "o a"to =%3 a"D &atin oilo"t &"0&iall3J an2 foo2"t%ff". T& T&a"%3 0ani -ill t%" =& tan"f&&2 to t& a&a& on"%&Rfo )all St&&t to 9ainSt&&t =3 -a3 of 15 a allon a" 0i&"D an2 1( a allon &atin oil 0i&".All ot& on"%& 0i&" -o%l2 "oon follo- t& l&a2" of a"D&atin oil an2 foo2. In t& a=o& =it of Cil&an i"to3D I 2&"i=&2 o- t& All&n2& o&n&nt 0int&2 %0 &"%2o" to a!& %0 fo t& "otfall in nationali&2

=%"in&""&" tat -a" 0o2%&2 =3 t&i 0oli3 of i!in -a&"D -il& at t& "a& ti& fiin 0i&". Ti" i" a o0l&t&l3 2iff&&nt -a3 to 30&inflation tan t& -a3 I &ni"ion it

fo t& A&ian &ono3R=%t on& t& A&ian &ono3 &t" t&&D t& &ff&t" of 30&inflation -ill =& &atl3 t& "a&: P&o0l& -ill t3 to &t o%t ofa""&t" in o2& to &t ol2 of oo2iti&".To &t all &3 a=o%t itD on&3 &loit3 -o%l2 a00oa infinit3D a" on&3 "%00l3 &ain" at fi"tJ fi&2D 3&in t& 0ani o& oo2iti&"D a&at& 2&an2 a" &a"%&2 =3 a&at& tan"ation" o&" &tial.)o%l2 t&& =& F&2&al o&n&ntint&&ntion of "o& "otM 9o"t 2&finit&l3R0&o0l& -o%l2 =& "&ain fo it. )o%l2 foo2 ationin =& i0l&&nt&2M Po=a=l3D an20o=a=l3 =3 -a3 of t& %&nt Foo2 Sta0" 0oa. Too0" on t& "t&&t"D 0ot&tin a" "tation" an2 "%0&a!&t"M C%f&-" to0&&nt lootinM Palliati& 2olla 0intinM G&"D 3&"D an2 &3 li!&l3 3&". Tat la"t =itR0alliati& 2olla'0intin: Tat@" t& !&3. )&n 0alliati& 2olla'0intin

a00&n"D it -ill =& t& final "ta&" of 30&inflationRit@" -&n "&n"i=l& 0&o0l& o%t to &ali& tat t& i"i" i" alo"t o&D an2 tat a n&- noal -ill "oon a00&a. B%t ti""ta& -ill =& f%!in a-f%l. Palliati& 2olla 0intin -ill ta!& 0la& -&n t& F&2&al o&n&nt "i0l3 %n" o%t ofo0tion". Sat &onoi"t" -ill &t on CNBC an2 a%& tatD ;T& &loit3 of on&3 i" 2&"to3in t& &ono3R-& %"t &0an2 t& %&n3 =a"&W> It@ll "o%n2 loialD =%t0alliati& on&3'0intin -ill =& a 0oli3 o0tion =on o%t of 0ani. T& final 0oli3 o0tion. It -on@t =& 2on& fo &il on"0iatoial &a"on"Ral-a3" &&=& A0oi" [;N&& a"i=& to ali& -at an =& &0lain&2 =3 ino0&t&n&.>J. It@ll =& ai&2 o%t =&a%"& of f&a an2 0ani. A -ol& =oatloa2 of fool" in )a"intonD on "&&in ti"t&i=l& oo2it3'2i&n i"i" %nfol2D -it on"%& 0i&" "ootin t& oonD -ill "&a fo 2olla" to =& 0int&2Ran2 t&i ational& -ill =& 0&f&tl3 &a"ona=l&D I an0atiall3 &a it no-: ;)&& ot to &t a" into t& an2" of t& a&a& A&ian iti&nD "o & o "& an =%3 foo2 an2 &atin oil fo t&i faili&"W )& an@t l&t

A&ian" "ta& an2 f&&& to 2&atW> Palliati& on&3'0intin -ill ta!& 0la&R&n& t& a&a& A&ian fail3 -ill li!&l3 =& %"in=%n2l&" of 1(( =ill" to fi& %0 t& in&3 tat 30&inflationa3 -int&.

Inflation +ill ca$%e %taflation hih ener' (rice% ha)e ($t $% on the =rin5 &ore inflation+ill cr$%h the econo&'


Alo"t all o%nti&" ao%n2 t& -ol2 a& "&&in at t& "a& ti& i o i"in inflation. In fatD "tatlinl3 i in t& la"t o 8 ont" t& n%=& of o%nti&"D 0ati%lal3 t& &&in -ol2D -i &at&" it" o-n "&t of 0o=l&" fo 0oli3. Tat i"D t& Unit&2 Stat&"D =&"i2&"ain to 2&al -it a -&a! an2 -&a!&nin &ono3D -& tin! a 0olon&2 "it%ation of &""&ntiall3 "tanation.

)& al"o a& to 2&al -it inflation. It i" a !in2 of "taflation. It i" not t& "taflation of t& 1#(" an2 1#8("D =%t it &all3 i" tat. An2 t&infoation an2 2ataD a" on& loo!" ao%n2 t& -ol2D "o-" "taflation to a& &&&2 ao%n2 t& -ol2 a"

-&ll. En&3 an2 oil 0i&" an2 foo2 0i&" a& 0at of tatD an2 tat o0liat&" 0oli3 &&n o& =&a%"& it i" oin to =& i0o""i=l& to 2&al-it an3 on& 0o=l& -it onl3 on& !in2 of 0oli3 -ito%t ta!in ao%nt of ot& 0olii&" tat 2&al -it ot& 0o=l&" an2 o- t&3 all int&at. It i" a2 &no% to 2&al-it on& 0oli3 an2 to %"& it &ff&ti&l3 an2 at t& it ti& to 2&al -it a 0ati%la &onoi 0o=l&D l&t alon& t& %ltit%2& of 0o=l&" tat &$%i& an a%nitiona00oa of an3 0olii&"D all of -i a& =30o2%t" an2 "i2& &ff&t" in int&atin -it on& anot&. I tin! if -& o& to tin!in a=o%t it li!& tat && in )a"inton

an2 &l"&-&&D tat -ill =& &3 n&- in ao&onoi 0oli3 tin!in. T& 0o"0&t of "taflation in t& Unit&2 Stat&" an2 a-&a!&ono3 an2 "ti!in i inflation &at&" a to% 0o=l& fo 0oli3 "ot o lon %n . It i" n&a i0o""i=l& fo t& F&2&a7&"&& to "ot tat on& o%tD i&n t& 2%al an2at& an2 fi"al 0oli3 i" a2& % o& 2iffi%lt in tat !in2 of "it%ation a" -&ll.

Inflation +ill ca$%e econo&ic do+nt$rn it cancel% a %ti&$l$% =' ca$%in %taflation


Inflation a" o&2 %0 $%it& "a0l3 in a la& n%=& of o%nti&"D 0ati%lal3 o& t& 0a"t "i'to'nin&ont". Of t& 4 &onoi&" anal3&2 an2 fo&a"t&2 =3?&i"ion Eonoi"D In. ?EJD t& inflation in2iat&2 a"

=&&n i o i"in in 41 of t& o%nti&"D in 0at fo t& "a& fo&" tat a& =&&n 2iin U.S. inflation i&''i"in oilD &n&3 an2 foo2 0i&"''=%t al"o fo t& 2&an2 0%ll of "tonl3'o-in &onoi&" an2 in&a"&2 o"t" of 0o2%tion. Inflation ta&t" o t& 2&"i&2 an&" of &ntal =an!" a& =&in &&&2&2 ino& tan alf t& o%nti&" -&& a00li&2. C&ntal =an!" an =& a"t%n -&n t&& i" =ot &&""ion an2 too i inflationD o ;"taflationD not "%& -i to 2&al -itD

t& ;"ta o t& ;flation. T& o=ination of a -&a! o -&a!&nin &ono3D i o i"in inflationD an2 i"in


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%n&0lo3&nt 0&"&nt" an &t&&l3 n&ati& =a!2o0 fo t& U.S. &ono3. T& i%"tan&" =&in "&&n no- a& f&-0aall&l"''0&a0" t& 2o-nt%n" of 1#/'5D 1##'8(D an2 t& &al3 1#8(". B%t non& of t&"& 2o-nt%n" a2 "o& of t& ot& all&n&" no- onfontin t& U.S.''1Jontation an2 i"i" in t& finanial "3"t& -it a 2&&& of i"!'a&"& =&aio an2 2&l&&ain not "&&n "in& t& 1#/(".

Inflation 5ill% the econo&' it de%tro'% %a)in%- lender% and in)e%tor%!

Fla6 011 ontri=$tor to For=e% Bill /K(/K+(11 Go% Call It InflationD I Call It T&ft. Fo=&" A&"" ?at& D ,onalo LiaD a&""&2K+1K1+D tt0:KKonalolia.=lo"0ot.oK+(1(K(8Ko-'30&inflation'-ill'a00&n.tl

B3 t& &n2 of tat t&i=l& 2a3D oo2it&" of all "ti0&"R0&io%" an2 in2%"tial &tal"D oilD foo2"t%ff"R-ill "oot t& oon. B%t it -ill not =&=&a%"& o2ina3 iti&n" a& lo"t fait in t& 2olla tat -ill a00&n in t& 2a3" an2 -&&!" a&a2JRit -ill a00&n =&a%"& on& T&a"%i&" a& not t& "%& "to& of al%&D

-&& a& all to"& on&3 ana&" "%00o"&2 to "ti! all t&"& 2olla"M In a =i ol2 a%ltM Un2& t& att&""M In &%o"M Coo2iti&":At t& ti& of t& 0aniDoo2iti&" -ill =& 0&&i&2 a" t& onl3 "%& "to& of al%& D if T&a"%i&" a& "%22&nl3 anat&a to t& a!&tR%"t a" T&a"%i&" -&&0&&i&2 a" t& onl3 "%& "to& of al%&D on& "o an3 of t& 9BS@" an2 C9BS@" -&nt "o% in +(( an2 +((8. It -on@t =& oo2it3 ETF@"D o 2&iati&"Rto"& -ill =&2i"i""&2 itf%ll3J a" =&in &&n l&"" "af& tan T&a"%i&". Unli!& =&fo& t& Fall of @(8D ti" o'ao%n2D 0&o0l& -ill 0a3 att&ntion to o%nt&0at3 i"!. So t& %n onoo2iti&" -ill =& fo at%alD f&&l'it'@a%"&'it@"'t&& oo2iti&". B3 t& &n2 of t& 2a3 of ti" 0aniD oo2iti&" -ill a& i"&n =&t-&&n 5( an2 1((. B3 -&&!@" &n2D

-&@& tal!in 15( to +5(. 93 0iat& %&"" i" ol2 -ill =& fin&""&2D =%t "il& -ill "oot %0 t& o"tRto 1(( an o%n& -itin t& -&&!.J Of o%"&D on&oo2iti&" "tat to =alloonD tat@" -&n o2ina3 iti&n" -ill &t t&i fi"t ta"t& of 30&inflation. T&3@ll "&& it at t& a" 0%0". If oil "0i!&" fo4 to 15( in a 2a3D an2 t&n to /(( in a att& of a -&&!R0&f&tl3 0o""i=l&D in t& i2"t of a 0aniRt& allon of a"olin& -ill o toD -at: 1(M 15M +(M So

-at a00&n" t&nM P&o0l&R&%la 9ain St&&t 0&o0l&R-ill =& a3 to =%3 %0 oo2iti&"&atin oilD foo2D a"olin&D -at&&J an2 =%3 t&no- -il& t&3 a& "till o&'o'l&"" affo2a=l&D at& tan lat&D -&n tat 15 allon of a" "oot" to /( 0& allon. If &&3on& 2&i2&" at o%l3 t& "a& ti& to&an& on& oo2R%&n3Rfo anot& oo2Roo2iti&"R-at a00&n" to t& &lati& 0i& of on& an2 t& &lati& al%& of t& ot&M Ea"3: On& "oa"D t& ot&

olla0"&". )&n 0&o0l& f&a! o%t an2 =&in 0ani'=%3in =a"i oo2iti&"D t&i o2ina3 finanial a""&t"R&$%iti&"D =on2"D &t.R-ill olla0"&:E&3on& -ill =& %"in to &t a"D "o a" to t%n ao%n2 an2 =%3 oo2iti&". So i&2iat&l3 aft& t& T&a"%3 a!&t" tan!&$%iti&" -ill fall ata"to0iall3D 0o=a=l3 -itin t& n&t f&- 2a3" follo-in t& T&a"%3 0ani. Ti" olla0"& in &$%it3 0i&"-ill =in an&$%ial&nt =%"t in oo2it3 0i&"Rt& "&on2 l& %0D if 3o% -ill. Ti" "&ll'off of a""&t" in 0%"%it of oo2iti&" -ill =& "&lf'&infoin: T&& -on@t
http://www.forbes.com/sites/billflax/2011/03/03/you-call-it-inflation-i-call-it-theft/http://www.forbes.com/sites/billflax/2011/03/03/you-call-it-inflation-i-call-it-theft/http://www.forbes.com/sites/billflax/2011/03/03/you-call-it-inflation-i-call-it-theft/http://www.forbes.com/sites/billflax/2011/03/03/you-call-it-inflation-i-call-it-theft/


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=& an3tin to "to0 it. A" it "0ill" o& into t& &&32a3 &ono3D &%la 0&o0l& -ill 0ani an2 "tat %nloa2in a2 a""&t"R2%a=l&oo2"D a" an2 t%!"D o%"&"Rin o2& to &t oo2iti&"D 0ini0all3 &atin oilD a" an2 foo2"t%ff". Inot& -o2"D &al'-ol2 a""&t" -ill not a00&iat& o &&n ol2 t&i al%&D -&n t& 30&inflation o&". Ti" i""o&tin 30&inflationi"t'"!&0ti" n&& $%it& "&& to a"0: In 30&inflationD a""&t 0i&" 2on@t "!3o!&tRt&3 olla0"&D =otnoinall3 an2 in &lation to on"%a=l& oo2iti&". A /((D((( o%"& fall" to (D((( o l&""D o =&tt& 3&tD 5( o%n&" of "il&R=&a%"& ina 30&inflationi"t &0i"o2&D a o%"& i" -otl&""D -&&a" 5( =it" of "il& an at%all3 =%3 3o% "t%ff 3o% it n&&2.

H'(erinflation ca$%e% econo&ic colla(%e, hile (ro)e%

Lira- 01, Freelance +riter for 4$%ine%% In%ider,onaloD 8K+K+(1(D ;H30&inflationD Pat II: )at It )ill Loo! Li!&>D ,onaloLiaD a&""&2 K+1K1+D tt0:KKonalolia.=lo"0ot.oK+(1(K(8K30&inflation'0at'ii'-at'it'-ill.tl

On& of t& &ff&t" of Cil&@" 30&inflation -a" t& olla0"& in a""&t 0i&". Ti" -o%l2 "&& o%nt&int%iti&. Aft& allD if t& 0i&"of on"%& oo2" an2 =a"i "ta0l&" a& i"in in a 30&inflationa3 &nion&ntD t&n a""&t 0i&" "o%l2 i"& a" -&llRitM E$%iti&" "o%l2 i"& in 0i&R"in& o&

on&3 i" a"in aft& t& "a& n%=& of "to!. 7&al &"tat& 0i&" "o%l2 i"& al"oRan2 fo t& "a& &a"on. 7itM At%all3D -onRan2 fo a "i0l& &a"on: On&=a"i n&&""iti&" a& %n&tD an2 &ain %n&t fo a "%"tain&2 0&io2 of ti&D an3 a""&t -ill =& -illinl3 an2in"tantl3 "aifi&2D in o2& to &&t tat =a"i n&&2. To 0%t it in "i0l& t&": If 3o% -&& 23in of ti"t in t& i22l&of t& 2&"&tD -o%l2 3o% i& %0 3o% fail3 &iloo 2iaon2"D in &an& fo a allon of -at&M T& an"-& i"o=io%"R3&". Go% -o%l2 "aifi& an3tin an2 &&3tinRin"tantl3Rin o2& to &&t 3o% =a"i n&&2"D o to"& of 3o% fail3. So a" t& "it%ation in Cil&2&t&ioat&2 in @+ an2 into @/D t& "to! a!&t olla0"&2D t& o%"in a!&t olla0"&2R&&3tinolla0"&2D a" 0&o0l& &it& a"&2 o%t of t&i a""&t" in o2& to =%3 =a"i oo2" an2 "ta0l&" on t& =la! a!&t D oa"&2 o%t "o a" to l&a& t& o%nt3 alto&t&. No a""&t la"" -a" "af&D fo ti" "&ll'offRit -a" ao""'t&'=oa2D an2 total.


43/80


44/80

AT T$rn o=% 7e' to Econo&'

Inflation 5ill% the econo&' it (re)ent% lo+er and &iddle cla%%e% fro& increa%in con%$&er%(endin

The >oderate 2oice 010 T& 9o2&at& oi& ;T& ,oo2 InflationKBa2 Inflation Sto3> A0il 14D +(1+D


45/80


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AT T$rn , >$lti(lier Effect

The &$lti(lier effect i% )er' %&all- +hich $nder&ine% the econo&ic %ti&$l$%

Ta'lor- 011 (rof of Econo&ic% at Stanford


47/80

B&n"t&in +((#J a""%&2 in CoanD C-i!D Ta3lo an2 )i&lan2 +(1(J %"&2 t& "a& ( 0&&nt on&"ion fato fo ant" to 0%a"&". CBO 2i2 not &0liitl3"tat& a on&"ion fato fo ant" to 0%a"&"D =%t CBO anal3"i" "&& 9a +((# &"tiat& in El&n2of+((#JJ a00li&2 a o&n&nt 0%a"&" %lti0li& to ant" -i -a" t& "a& "i& a" t& %lti0li& a00li&2to f&2&al 0%a"&" in t& a"& of infa"t%t%& "0&n2in an2 ( 0&&nt of t& f&2&al 0%a"&" %lti0li& int& a"& of o&n&nt on"%0tionD i0l3in a ant'to'0%a"&" on&"ion of =&t-&&n ( an2 1((0&&ntD -i i" &&n &at& tan ( 0&&nt. A" "tat&2 a=o&D Hall +((#J it&" CBO a" a "o%& fo t& &ff&t of A77A on o&n&nt 0%a"&".Ta=l& 8 "%ai&" t& 2iff&&n&" =&t-&&n t&"& initial &"tiat&" an2 t& &"tiat&" fo ti" 0a0& a""%intat t& an& in 0%a"&" at t& f&2&al l&&l a& &o at& tan n&ati&. T&"& initial &"tiat&" -&&

=a"&2 la&l3 on %&""'-o! "in& t&& a& no &lia=l& &0iial &"tiat&" of o- "tat& an2 loal o&n&nt"&"0on2 to t& &&i0t of t&0oa3 f&2&al ant". B%tD =3 t& "%& of +((# it -a" =&oin l&a tatt&"& initial &"tiat&" -&& fa too i o&n&nt 0%a"&" -&& not onti=%tin to t& &o&3 a" %a" t& initial &"tiat&" 0&2it&2. CoanD Ta3loD an2 )i&lan2 +((#J &0ot&2 tat non2&f&n"& o&n&nt 0%a"&" onti=%t&2 l&"" tan 1 0&&nta&0oint" to t& 5.4 0&&nta& 0oint &al ,?P o-t i0o&&nt fo t& fi"t to t& "&on2 $%at& of +((#. T& lo- &"0on"& at& of o&n&nt 0%a"&" to A77A i"li!&l3 t& 0ini0al &a"on fo t& 2iff&&n& =&t-&&n t& initial &"tiat&" of t& A77A@" i0at an2 -at at%all3 a00&n&2.5

The >$lti(lier effect i% %&all , e&(irical e)idence

Ta'lor- 011 (rof of Econo&ic% at Stanford into t& &ono3 %"t fi"t =& ta&2 o =oo-&2 o%t of t& &ono3. No n&-"0&n2in 0o-& i" &at&2. It i" &&l3 &2i"ti=%t&2 fo on& o%0 of 0&o0l& to anot&. + S0&n2in'"ti%l%" a2oat&"t30iall3 &"0on2 tat &2i"ti=%tin on&3 fo ;"a&"> to ;"0&n2&"> -ill l&a2 to a22itional "0&n2in. Tat a""%&" tat "a&" "to& t&i "ain" in t&i att&""&" o

&l"&-&& o%t"i2& t& &ono3. In &alit3D n&al3 all A&ian" &it& in&"t t&i "ain" =3 0%a"in finanial a""&t""% a" "to!" an2 =on2" -i finan&" =%"in&"" in&"t&ntJD o =3 0%a"in non'finanial a""&t" "% a"

&al &"tat& an2 oll&ti=l&"D o t&3 2&0o"it it in =an!" -i $%i!l3 l&n2 it to ot&" to "0&n2J. T& on&3 i"%"&2 &a2l&"" of -&t& 0&o0l& "0&n2 o "a&. ,o&n&nt annot &at& n&- 0%a"in 0o-& o%t of tin ai. If Con&"" f%n2"n&- "0&n2in -it ta&"D it i" "i0l3 &2i"ti=%tin &i"tin ino&. If Con&"" in"t&a2 =oo-" t& on&3 fo 2o&"ti in&"to"D to"&in&"to" -ill a& tat % l&"" to in&"t o to "0&n2 in t& 0iat& &ono3. If Con&"" =oo-" t& on&3 fo fo&in&"D t& =alan&of 0a3&nt" -ill a2%"t =3 &$%all3 &2%in n&t &0ot"D l&ain ,?P %nan&2. E&3 2olla Con&"" "0&n2"%"t fi"t o& fo "o&-&& &l"&. Ti" 2o&" not &an tat o&n&nt "0&n2in a" no &onoi i0atat all. ,o&n&nt "0&n2in oft&n alt&" t& o0o"ition of total 2&an2D "% a" in&a"in on"%0tion att& &0&n"& of in&"t&nt.

The >$lti(lier effect i% $ncertain it re#$ire% =etter (lannin and %t$d'
http://www.stanford.edu/~johntayl/CT%20Dec%2024,%202011.pdfhttp://www.stanford.edu/~johntayl/CT%20Dec%2024,%202011.pdfhttp://shawnslayton.com/open/iPAD/govt%20spending%20no%20economic%20growth.pdfhttp://www.stanford.edu/~johntayl/CT%20Dec%2024,%202011.pdfhttp://www.stanford.edu/~johntayl/CT%20Dec%2024,%202011.pdfhttp://shawnslayton.com/open/iPAD/govt%20spending%20no%20economic%20growth.pdf


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Fran5el 11' Director of Tran%(ortation Polic' for the 4i(arti%an Polic' enterEilD in2&0&n2&nt on"%ltanton tan"0otation 0oli3 an2 0%=li ana&&nt i""%&". Eil H.D ;Tan"0otation an2


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AT T$rn , Infra%tr$ct$re 5e' to Econo&'

Foc$%in on o= creation $nder&ine% the econo&ic =enefit% of Infra%tr$ct$re it =eco&e%(olitical (or5- rather than efficientl' &anaed

"tt 9 Senior re%earch fello+ in the Tho&a% A! 3oe in%tit$te for the Econo&ic Polic' St$die% 7onal2 ?.D A0il +D 9oan S&nio 7&"&a F&llo- in t& Toa" A. 7o& In"tit%t& fo Eonoi Poli3 St%2i&" at T& H&ita& Fo%n2ation.D 9o& Tan"0otation S0&n2in:Fal"& Poi"&" of Po"0&it3 an2


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AT Inflation %o Lo+ No+ No Internal Lin5

Inflation i%nBt too lo+ =oo%tin it +ill onl' ca$%e Staflation arter era (ro)e%

The :a%hinton Ti&e% 01 ;7&iin (" "taflation F&2&al 7&"&& on&ta3 0oli3 0oi"&" inflation an2 %n&0lo3&nt> No&=& 8D +(1(


51/80

AT O=a&aB% Sti&$l$% Pac5ae :or5ed

Fi%cal %ti&$l$% did not +or5 it i% i&(o%%i=le to a%%in credit for o= creation and it foc$%e% too&$ch on the De&and %ide

3aan- 010- Profe%%or of Finance at the "ni)er%it' of hicao 4ooth School of 4$%ine%%7a%aDt& a%to of Fa%lt Lin&": Ho- Hi22&n Fat%&" Still T&at&n t& )ol2 Eono3D T& T%& L&""on" of t& 7&&""ionD Fo&in Affai"D 9a3K


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AT Inflation hel(% 8ro+th

Inflation cannot hel( the econo&' it i% i&(o%%i=le to &anae (reci%el'

The :a%hinton Po%t 010- "taff -it& 7o=&t


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AT Hel(% the Econo&' Lon Ter&

Fi%cal %ti&$l$% that co&&it% to Lon Ter& %(endin +ill h$rt the econo&' the =enefit% +ill=e %hort ter& co&(ared to red$ced in)e%t&ent in the lon ter&!

S$&&er%- 09 (rof of econo&ic% at Har)ard la-&n& D fo& "&&ta3 of t& %.". ?&0at&nt of t& t&a"%3D;a -&a!&n&2&ono3: o- to &"0on2M> S&0t&=& #D +((8D %n& +1D +(1+D &ain =&fo& t& oitt&& on t& =%2&t o%"& of &0&"&ntati&"tt0:KK---.0oa&"".oKon&""Ko%"&K=%2&tKin2&.tlJ

T& ti2 a&a I -ant to a22&"" i" t& $%&"tion of fi"al "ti%l%" in t& ont&t of t& o&all =%2&t 0it%&. )il& t&& i" a "ton a"& fo n&- fi"al

"ti%l%" &a"%&"D -i =3 2&finition in&a"& t& 2&fiit in t& "ot %nD t& lon%n F&2&al =%2&t "it%ation &ain" a att& of &at on&n. E&""i&a%%lation of F&2&al 2&=t o& t& n&t 2&a2& t&at&n" to &2%& in&"t&nt" in "lo- o-tDo0oi"& finanial "ta=ilit3D an2 in&a"& A&ia" %ln&a=ilit3 an2 &2%& it" infl%&n& in t& -ol2. It i"itial to &oni& tat la&D 0&an&nt in&a"&" in t& F&2&al 2&fiitD if &nat&2 to2a3D a& li!&l3 to "lo- t&&ono3 =3 ai"in a0ital o"t" an2 %n2&inin onfi2&n& a" in&"to" &oni& tat %ltiat&l3 t&3 -illa& to 0a3 i& ta&" to "&i& t& int&&"t o &0a3 t& 0ini0al on 2&=t in%&2. 9&a"%&" "% a" 0&'oittin no- to la& %n0ai2 ta %t" o "0&n2in 0oa" tat -ill ta!& &ff&t onl3 "&&al 3&a" fo no-a& li!&l3 to a& a2&"& &ff&t" on n&a't& &onoi o-t an2 &a&=at& t& %&nt 2o-nt%n . Ti" &ff&t i"

%"t t& io ia& of t& 0o&"" a2& in t& 1##(" follo-in &nat&nt of a &2i=l& &2i%'t& 0oa of 2&fiit &2%tion. It follo-" tat in &natin fi"al"ti%l%" &a"%&"D a& "o%l2 =& ta!&n not to ai"& 0o&t&2 2&fiit" =&3on2 a "ot oion of a 3&a oD ato"tD t-o. B&3on2 ti" oionD it i" &""&ntial tat an3 n&- "0&n2in o ta %ttin =& off"&t =3 &a"%&" tat &2%&0o&t&2 2&fiit". In2&&2D at l&a"t a 0otion of an3 n&- "ti%l%" &nat&2 o& t& n&t o%0l& of 3&a" -o%l2 =&"t

=& at&2 -it a lon& oion &ffot to &2%& 2&fiit""o tat o& a 5' to 1('3&a oion t& &nat&2 0oa -a" =%2&t n&%tal.


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55/80

AT Federal 3e%er)e can hec5 Inflation

Federal o)ern&ent canBt %to( h'(erinflation , %ellin Trea%$rie% %i&(l' e6acer=ate% the(ro=le&

Lira- 01, Freelance +riter for 4$%ine%% In%ider,onaloD 8K+/K+(1(D ;Ho- H30&inflation )ill Ha00&n>D ,onalo LiaD a&""&2K+1K1+D tt0:KKonalolia.=lo"0ot.oK+(1(K(8Ko-'30&inflation'-ill'a00&n.tl

L&t@" ta!& t& F&2: Ho- o%l2 t&3 "to0 a %n on T&a"%i&"M An"-&: T&3 an@t. S&&D t& F&2 a" al&a23 =&&n "oin %0 T&a"%i&"R

tat -a" t&i "tat&3 in +((8R@(#: B%3 %0 toi a""&t" fo t& TBTF =an!"D an2 a& t& t%n ao%n2 an2=%3 T&a"%i&" in"t&a2D all t& -il& a&f%ll3 onitoin T&a"%i&" fo "in" of -&a!n&"". If T&a"%i&" no- t%n toiD -at@" t& F&2"%00o"&2 to 2oMB&nan!& lon ao an o%t of ao: H&@" %"t -ain an &0t3 %n ao%n2. If t&&@" a %n on T&a"%i&"D an2 & "tat"

=%3in t& to 0o0 t& %0D it@ll onl3 i& in&nti& to ot& T&a"%3 ol2&" to &t o%t no- -il& t&&ttin@" "till oo2.If &&3on& 2&i2&" to &t o%t of T&a"%i&"D t&n B&nan!& an2 t& F&2 an 2o a="ol%t&l3 notin &ff&ti&. T&3@& at t& &3 of &&nt"RinfatD t&3 a& =&&n fo $%it& a -il& al&a23. T&3 %"t a&n@t &ali&2 it. )&ll if t& F&2 an@t "to0 ti"D o- a=o%t t& F&2&al o&n&ntR"%&l3 t&3 an "to0ti"D itM In a -o2D no. T&3 &tainl3 la! t& &an" to 0&&nt a %n on T&a"%i&" . An2 a" to 30&inflationD -at &atl3 -o%l2 t& F&2&alo&n&nt 2o to "to0 itM I0l&&nt 0i& ontol"M Tat-ill onl3 i& i"& to a a0ant =la! a!&t. P%t "ol2i&" o%t on t& "t&&tM

A&ia i" too =i. S$%it o%t o& ;"ti%l%">M S%&D 0%0 &&n o& %&n3 into a a0i2l3 30&inflatin &&32a3 &ono3Rit . . .

"%in fi%cal %ti&$l$% $nder&ine% the effecti)ene%% of &onetar' (olic' it di%tort% (rice%

Steil- 0; , director of international econo&ic% at the o$ncil on Forein 3elation% B&nn )3 6&3n&"-a" -onD an2 -3 it att&" 9a3 1#D +((# Finanial Ti&" tt0:KK=lo".ft.oK&onoi"t"fo%K+((#K(5K-3'!&3n&"'-a"'-on'an2'-3'it'att&"K[a13SHtECA&""&2 t30& a""%0tion". No=&l &onoi"t E0lain tat to B&n B&nan!&.)at 2o&" allti" att&M Tat i"D -at "o%l2 -& 2o o not 2o to2a3 to &t o%"&l&" onto a "%"taina=l& 0at o%t of&&""ionM )&llD t&& a& t-o =an2" of &&23. T& fi"t a& o&n&nt &a"%&" int&n2&2 to &liinat&o="tal&" to t& a2a0tation of "%00l3 to anin 2&an2. Ti" i" t& no- %'alin&2 la""ial =an2 of &&23. T& "&on2 a&fi"al an2 ot& o&n&nt &a"%&" 2&"in&2 to fo& 2&an2 to a2a0t to "%00l3. Ti" i" t& 6&3n&"ian

=an2 of &&23D no- =&lo&2 in )a"intonD =a"&2 on t& =&li&f tat %n2&'&0lo3&nt i" a on&nital 2&f&t of t& &onoi "3"t&. Ea %& 2o"& ofti" "&on2 &&23 "&&" to f%t& o=lit&at& t& f%ntionin of t& 0i& &ani"D t%" n&&""itatinanot& %& 2o"& of it. In t& lon %nD ti" alo"t &tainl3 &an" i00lin 2&=tD inflation o =ot. B%t 6&3n&"D ofo%"&D a2i"&2 aain"t tin!in too % a=o%t t& lon %n.
http://blogs.ft.com/economistsforum/2009/05/why-keynes-was-wrong-and-why-it-matters/#axzz1ySHtzECzhttp://blogs.ft.com/economistsforum/2009/05/why-keynes-was-wrong-and-why-it-matters/#axzz1ySHtzECz


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1N Sti&$l$% Ad)antae

1! No Har& the Econo&' i% i&(ro)in %lo+l' no+ , inflation i% c$rrentl' lo+- ande&(lo'&ent i% ro+in %lo+l'

.ellen- $ne 010, 2ice hair of the Federal 3e%er)e D A&""&2 K+1K1+Dtt0:KK---.f&2&al&"&&.oKn&-"&&nt"K"0&&K3&ll&n+(1+((a.t

In 3 &a!" tonitD I -ill 2&"i=& 3 0&"0&ti& on on&ta3 0oli3. To =&inD o-&&D Ill ilit "o& of t& %&nt on2ition" an2 !&3 f&at%&" of t& &onoi

o%tloo! tat "a0& 3 i&-". To antii0at& t& ain 0oint"D t& &ono3 a00&a" to =& &0an2in at a o2&at& 0a& . T&%n&0lo3&nt at& i"alo"t 1 0&&nta& 0oint lo-& tan it -a" a 3&a aoD =%t -& a& "till fa fo f%ll &0lo3&nt. Loo!in a&a2D I antii0at& tat "inifiant &a2-in2" -ill ontin%& to &"tain t& 0a& of t& &o&3 "o tat t& &ainin &0lo3&nt a0 i" li!&l3 to lo"& onl3 "lo-l3.Att& "a& ti&D inflationa="tatin fo t& tan"ito3 &ff&t" of o&&nt" in oil 0i&"J a" =&&n %nnin n&a + 0&&nt o& t&0a"t t-o 3&a"D an2 I &0&t it to &ain at o =&lo- t& F&2&al O0&n 9a!&t Coitt&&" t& FO9C"J +0&&nt o=&ti& fo t& fo&"&&a=l& f%t%& .A" al-a3"D on"i2&a=l& %n&taint3 att&n2" t& o%tloo! fo =oto-t an2 inflation &&nt" o%l2 0o& &it& o& 0o"iti& o n&ati& tan -at I "&& a" t& o"t li!&l3 o%to&. Tat "ai2D a" I

-ill &0lainD I on"i2& t& =alan& of i"!" to =& tilt&2 to-a2 a -&a!& &ono3.

0! T$rn Str$ct$ral 3efor& , o= %ti&$l$% h$rt% lon ter& econo&ic reco)er' =eca$%e itfoc$%e% on de&and =a%ed %ol$tion% +hich di%tract% fro& tran%for&in the +or5force o=%&$%t &o)e a+a' fro& con%tr$ction to infor&ation technolo'- and o)ern&ent% need to c$t%(endin to enhance inno)ation

3aan- 010- Profe%%or of Finance at the "ni)er%it' of hicao 4ooth School of 4$%ine%%7a%aDt& a%to of Fa%lt Lin&": Ho- Hi22&n Fat%&" Still T&at&n t& )ol2 Eono3D T& T%& L&""on" of t& 7&&""ionD Fo&in Affai"D 9a3K


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Haa&an- 0; , an anal'%t +ho foc$%e% on and a((lie% eneral &ar5et trend% to f$t$re%toc5/%ector acti)itie%A%"tin tt0:KK"&&!inal0a.oKin"ta=loK4#415'a%"tin'aaanK/(+(8'a'='&t'&a23'fo'anot&'a!&t'2i0'o-'"ti%l%"'i"&0lain'&2it A B \ ,&t 7&a23 Fo Anot& 9a!&t ?i0 'Ho- "ti%l%" i" &0lain &2it Ot 5D +((# A&""&2 D an2 t&"0&n2in 0o-& "i2& of t& &$%ation 2o&" not an&: ?olla Sti%l%"J K Sti%l%" \ S0&n2in Po-& B%t t& on"%& tin!" tat:?olla Sti%l%" \ S0&n2in Po-& Sti%l%" \ Fal"& S0&n2in Po-& Ti" &it&n" on"%& onfi2&n&D

-i a%"&" t& to 0%a"& o&.A" -& al&a23 &"ta=li"&2D =%"in&""&" &"0on2 to 2&an2 =3 in&a"in 0o2%tion: Fal"& S0&n2in Po-& \B%"in&""&" Inflat&2 =3 Sti%l%" Loo! failiaM In onl%"ion: T& 0o=l&-& &at&2 an onl3 =& fi&2 -&n t& &ono3 &a&" an %n'atifiial &$%alit3 =&t-&&n "0&n2in 0o-& an2 =%"in&""&". A" I a& "o-nD t& o&n&nt i" not t&atin t&0o=l&D it i" %"t t&atin t& "30to". B3 onl3 t&atin t& "30to"D a fal"&l3 inflat&2 a!&t i"'on& aain'=&in&at&2. T%"D o% &ono3 i" not % &alti& t&n it -a" 2%in t& 2&=t =%il2 %0 &0&t to "&& a &0&at oft& @( &&""ion in t& n&a f%t%&.

C! T$rn "nion% , Infra%tr$ct$re %ti&$l$% increa%e% inflation =eca$%e it =oo%t% %(endin and(ro&ote% $nion% thi% ca$%e% %taflation

ontinetti- 09, Editor,in,chief of The :a%hinton Free 4eacon 9att&-D H&& T&3 Co&D T& )&&!l3 Stan2a214D Ot + +((8D 0o$%&"tD


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6&3n&"ian Al&3 )at 0olii&" &&t ti" it&ionM Un2& t& i%"tan&"D &3 f&-. Con"i2&D fo &a0l&D t& 0oli3 of in&a"in t& =%2&t 2&fiit to "0% t&&ono3. T& a%&nt i" fail3 "i0l&: t& &ono3 i" %n2&0&foin 2&an2 i" too lo- t& o&n&nt 2&fiit i" 0at of a&at& 2&an2D "o %"t in&a"& t& 2&fiit.

It@" an &$%ation. Ho- an it =& -onM T& an"-&D of o%"&D i" tat t& &ono3 i" o& o0liat&2 tan ti" "i0l& &$%ation.,o&n&nt =oo-" t& on&3D "o &&3 2&fiit 2olla "0&nt =3 t& o&n&nt i" a 2olla l&"" aaila=l& to t&0iat& "&to. T& an"-&D in ot& -o2"D i" tat t& ao&onoi o2&l ino&" finanial int&&2iation -ii" t& =&a2 an2 =%tt& of finanial a!&t". Po0on&nt" -ill o%nt& =3 "a3in tat 0&o0l& a& "ain o&Dan2 o0oation" a& "ittin on o%n2" of a".T%&D =%t it an&" notin.All ti" "ain i" not l3in 2oant in "o&

a%lt o "t%ff&2 in "o& att&"".Ioniall3D &&n if i t -&&D i&"0on"i=l& 2&fiit "0&n2in -o%l2 "%&l3 not 2a- it o%t. On t& onta3D ti""ain i" 2&0o"it&2 -it t& finanial "3"t&D -i t&n ta!&" t& &"o%&" fo to"& -o 2o not %&ntl3

n&&2 t& an2 a!&" t& aaila=l& to to"& -o 2o n&&2 t&. In t&" of a&at& flo-"D ti" 0o&""-o!" %"t a" -&ll to2a3 in &&""ion a" it 2o&" at f%ll &0lo3&nt. T%"D 6&3n&"ian 2&an2'"i2& "ti%l%" 2o&"not &l0. It i" fi"al al&3. An2=3 a22in to t& 2&fiit an2 t%" f&a" a=o%t t& f%t%&D it "%&l3 a22" to t& &ono3@"&a2-in2". Infa"t%t%& In&a"&2 infa"t%t%& "0&n2inD a" t& P&"i2&nt an2 ot&" a& a2oat&2D i" an &a0l& of a 2o%=l&foll3.To =& l&aD t& i""%& && i" not -&t& t& nation n&&2" o& o l&"" infa"t%t%& "0&n2in. I a not &0&""in an o0inion on tat on& -a3 o anot&. T&i""%& i" -&t& it at" a" a "ot't& "ti%l%". It 2o&" not. Fi"tD a""%in t& a22itional "0&n2in -a"finan&2 =3 a22itional =oo-inD t& 0oli3 %n" afo%l of t& 6&3n&"ian falla3. To =& "%&D on& a 0o&t i"%n2&-a3 on& an 0oint to t& 0&o0l& -o!inD =%t %"t a" "%&l3 t& =oo-in tat a2& tat 0o&t 0o""i=l&&2%&2 &0lo3&nt &l"&-&&. T& "&on2 foll3 i" %"t a" 0lain. Infa"t%t%& "0&n2in on 0o&t" i" a0ital int&n"i&an2 "t&t&" o& 3&a". It annotD &&n if &nat&2D "-iftl3 aff&t &0lo3&nt in t& n&t 3&a 0l%".

9! Sti&$l$% %(endin doe%nBt %ol)e the econo&' it doe%nBt addre%% de=t or re%tr$ct$rin

7r$&an (ro)e%

PhilB% Stoc5 :orld 010 Pa%l 6%an@" Eonoi Blin2&"D 9a3 +1 +(1+D Po$%&"tD


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2&fiit "0&n2in a" "ti%l%" -ill fa2&D %"t a" it al-a3" a" in t& 0a"tD in ti" o%nt3 a" &l"&-&&. P&a0" ti" "i0l& )aPo atil& a!" t& =&innin of t& &n2 fo t&lat&"t inanation of ti" fi"al foll3.

10! Econo&ic %ti&$l$% fail% it e&(iricall' ha% failed- and cannot (re)ent E$ro(ean %(illo)er

Fo%ter 11' Senior Fello+ in the Econo&ic% of Fi%cal Polic' at The Heritae Fo$ndation


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,,E6t! Str$ct$ral 3efor&

Sti&$l$% %(endin on on%tr$ction concentrate% o= creation in dead,end ind$%trie% thi%lea)e% the econo&' )$lnera=le! The t$rn i% "ni#$e +e are foc$%in on %hiftin %ector% no+

:arh$r%t- 011- Proect >anaer at 4AE S'%te&% A$%traliaCi"D An&la 6noD Ba=aa Poo!D


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an@t fi& 0&o0l&D tat ao2in to a ,&&! oll&a%&J 3o% an@t &&n &t a 2i&@" li&n"& -ito%t 0a3in a =i=&M ?o&" it not att& at all tatD a" t& Int&national 9on&ta3F%n2 2&liat&l3 0%t it in it" lat&"t &0ot on ,&&&D t& ;"t%t%al &fo 0oa> ai&2 at ;2&&0l3 inain&2 "t%t%al ii2iti&" in la=oD 0o2%tD an2 "&i& a!&t"> otno-&&M ?o&" it not att& tat ,&&& a" a i o=ination of in2ii2%alD o0oat&D -&alt an2 "oial ta&"D i& "till %n2& Va%"t&it3MV T%&D ,&&!" fao%"l3 2on@t0a3 ta&"D =%t =%"in&""&" tat %"t o0&at& ill&all3 to aoi2 ta&" a& % l&"" &ffii&nt. 9on&3 i" fl&&in ,&&&D Ital3 an2 S0ain. ?o&" tal! of &itin t& &%oD follo-&2

$%i!l3 =3 2&al%ationD inflation t& I9F 0&2it" /5 0&&nt in ,&&&D "o%l2 it l&a&JD an2 a0ital ontol"D a& notin to 2o -it la! of in&"t&ntM 6&3n&"ian"%& 2&al%ation to ain o0&titi&n&"". ,&&! -a&" a& in fat 2&lin&2 a=o%t 1( to 1+ 0&&ntD ao2in to t& I9F '' "o %fo t& i0o""i=ilit3 of noinal -a& 2&lin&".G&t in&"t&nt an2 0o2%tion a&n@t t%nin ao%n2. ,&&! ;2&an2> n&&2n@tatt&'' t& -ol& 0oint of t& &%o a&a i" tat ,&&& an "&ll to ,&an3D "o lon a" ,&&& "ta3" in t& E%oon&. B%t it i"nt a00&nin. I" tat a 3"t&3M )o%l2lo-& -a&" o0&l 3o% to in&"t on&3 in ,&&&D "%o%nt a ti!&t of &%lationD &0o"& 3o%"&lf to t& t&at" of -&altD 0o0&t3 an2 =%"in&"" taationD %&n3

&0o0iation an2 a0ital ontol"D o &&n nationaliationM In "%D i"nt it 0la%"i=l& tat a oo2 0at of E%o0&@" a%"t&it3 2ol2%" a& lin!&2to ;"%00l3D> not ;2&an2D> ;io&onoi"> not ;ao&onoi"D> -&&2" in t& &onoi a2&nD not a -ant of f&tili&MI"nt it 0la%"i=l& tatfato" =&3on2 "i0l& 2&lin&" in o&n&nt "0&n2in att& in t& &ono3@" &"0on"& to a 2&=t i"i"M Tatin"it "%&"t" a 2iff&&nt "tat&3: L&t@" all it ;,o-t No-.> Fo&t a=o%t ;"ti%latin.> S0&n2 onl3 on -ati" &all3 n&&2&2. )& o%l2 &a"il3 "to0 "%="i2i&" fo ai%lt%&D &l&ti a" o =%il2in oa2" an2 =i2&" tono-&& it no-D -ito%t f&ain a &&""ion. 9o"t V"0&n2inV i" in fat tan"f& 0a3&nt"D-i &&n6&3n&"ian &onoi" &oni&" a& not &3 "ti%lati&Dnot t& 3tial an2 %io%"l3 a=on'int&n"i&J oa2" an2 =i2&"D an2 o"t oftat o&" to 0&o0l& -o a& &lati&l3 -&ll off 7at& tan ai"& ta at&" f%t& on ;-&alt> an2 t& ;iD> 2iin t& %n2&o%n2D a=oa2D o a-a3 fo =%"in&""

foationD fi t& ta o2&D a" &&3 oi""ion a" &o&n2&2. Lo-& ainal at&" =%t &liinat& t& a& of 2&2%tion". In E%o0&D&liinat& t& f&a" of -&alt onfi"ationD &%o =&a!%0 an2 %&n3 2&al%ation tat a& 2iin "ain an2 in&"t&nt o%t of t& "o%t. 9o"t of allD &o& t&0of%"ion of &%lation an2 in&a"inl3J 2i&t o&n&nt ana&&nt of t& &ono3. ,o-t i" t& !&3 to0a3in off 2&=t". T& onl3 -a3 to &"a0& la& 2&=tK,?P atio" i" to &=a! on a 2&a2& o o& of "oli2o-t.,o-t li!& ti" o&" fo lon'%n 0o2%tiit3D not "ot'%n "ti%l%". E%o0& i" =&innin to fi%& ti" o%t.Ital3@" 0i& ini"t&D 9aio 9ontiD i" a22&""in i" o%nt3@" 2&=t i"i" =3 0o0o"in fa'&ain 2&&%lationD no-. )il& i" 0o0o"al" a&nt o0l&t& o lo"& to a2ial&no%D an2 t&3 a& o=in&2 -it "o& %nfot%nat& =%"in&""'"tiflin ta in&a"&"D it@" &a!a=l& tat an3on& in E%o0& i" =&innin to tal! a=o%t ti" a00oa.

;St%t%al &fo> i" ital to &"to& o-t no-D not a a%& i2&a fo an3 3&a" in t& f%t%& -&n t&"ti%l%" a" -o!&2 it" ai.E%o0& l&an&2 tat it@" al"o a lot a2& 0olitiall3 tan t& =&&3 lan%a& "%&"t". ;7&fo> i"n@t %"t ;0oli3> an2&22o-n =3 t&noat" li!& %l&" on t& 0o&nan& of 0o"i%tto it inol&" ta!in a-a3 "%="i2i&" an2 int&&ntion" tat &nt&n&2 int&&"t" a& o-n to lo&D an2 "%00ot

0olitiian" to 0ot&t. T&3 -ill fit it toot an2 nail. Tat i" &&n o& &a"on to a22&"" o-t no-D -il& t&& i" a i"i". T&-ill to 2o "o -ill &a0oat& if =&tt& ti&" &t%nD an2 t& a=ilit3 to 2o "o -ill 2i"a00&a if t& &onoi&" 0l%n&

Sti&$l$% %(endin +onBt =oo%t the econo&' it red$ce% in)e%tor confidence- it direct% &one'a+a' fro& (rod$cti)e +or5er%- it increa%e% =$rea$crac' and it foc$%e% on %hort ter& ain%!

>eltzer 011' (rofe%%or of ($=lic (olic' at the Te((er School- arneie >ellon "ni)er%it'All&n9&lt&D a i"itin "ola at Stanfo2 Uni&"it3" Hoo& In"tit%tionD Allan H.D Fo% 7&a"on" 6&3n&"ian" 6&&0 ,&ttin It )onD T& )all St&&t


66/80

Prefer o$r e)idence 3aan i% one of the &o%t re%(ected econo&i%t% in the +orld hi% +or5 i%5e' to $nder%tandin the %ti&$l$%

The Econo&i%t- 0o11T& ont&0oa3 6&3n&" )i &onoi"t i" 2oin o"t to "a0& 0o"t'i"i" tin!inM F&= 1(t +(11tt0:KK---.&onoi"t.oKno2&K18118#85M"to3i2\18118#85A&""&2 D o% onlin& fo% of o& tan 5(0oin&nt &onoi"t"D to noinat& oll&a%&" -it t& o"t i0otant i2&a" fo a 0o"t'i"i" -ol2. T&&"0on2&nt" a& %0 -it n&al3 +( 2iff&&nt na&". Non& -on an a="ol%t& aoit3D=%t a f&- o00&2 %0 o& oft&n tan ot&""&& ta=l&J. Fi"t aon t& i" 7a%a 7aan of t& Uni&"it3 of CiaoD -o"& =oo! ;Fa%lt Lin&"> a%&"tat i"in in&$%alit3 l&2 o&n&nt" to failitat& &2it o-tD onti=%tin to t& i"i". 7o=&t Sill& of Gal& Uni&"it3a" lon -an&2 of t& 2an&" of iational &%=&an&D an2 %&" oll&a%&" to on"i2& ;anial "0iit"> in a""&""in &onoi fl%t%ation". 6&nn&t 7ooff@" -o! on 2&am

Inflation DA - 7wk

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