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News Link • Economy - Economics USA

Inflation - real or hysteria?

Debate continues to rage between the inflationists who say the United States money supply is increasing, dangerously devaluing the currency, and the deflationists who say we need more money in the economy to stimulate productivity. The debate is not just an academic one, since the Federal Reserve's monetary policy turns on it and so does congressional budget policy.

Inflation fears have been fueled since 2009, when the Fed began its policy of "quantitative easing" (effectively "money printing"). The inflationists point to commodity prices that have shot up. The deflationists, in turn, point to the housing market, which has collapsed and taken prices down with it. Prices of consumer products other than food and fuel are also down. Wages have remained stagnant, so higher food and gas prices mean people have less money to spend on consumer goods.

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