re: #131 Romantic Heretic

The biggest problem is that inflation is regarded as a ‘problem’. In my opinion, it’s not. It’s a diagnostic reading.

Having 0% inflation would be like having a room temperature body temp. Which is more commonly known as a corpse. A high body temp will cause a doctor to start looking for an infection of some type. But since inflation is a ‘problem’ economists treat the inflation rather than look for a cause.

As a result much of our treatment for inflation is on the same level as bleeding in medicine. Yeah, it works, kinda. But it can too often lead to a corpse.

I recall about forty years ago, when we still had a Progressive-Conservative party in Canada and it formed the federal government, it was decided that inflation had to be bought down to zero. Thanks to a ‘report’ from The Fraser Institute, Canada’s version of the Heritage Foundation.

Interest rates were jammed through the roof. In excess of twenty percent. It was the equivalent of jamming a pillow over the economy’s face. We’re still paying off debts at those rates.

And the Fraser Institute is still influential among the authoritarians and barbarians masquerading as conservatives. Oh, and the Progressive-Conservatives vanished from Canadian federal politics.

my understanding of economics is through the prism of a political science degree and a law degree… so, grain of salt, but… i think the smart way to look at inflation is in relation to other economic indicators - particularly wage growth and unemployment. if we have low unemployment, and wage growth is keeping up or beating inflation, then we are good. it’s when unemployment and inflation go up and wage growth doesn’t keep up (the dreaded stagflation of the late 70s), that we are fucked.