The Obama Approach To Economic Policy: Losing Faith

by Pejman Yousefzadeh on March 26, 2009

Jennifer Rubin lays out the case against current Administration economic thinking. She largely has a point, though I want to differ from her in one respect. Rubin tells us that “We will have to inflate our way out or raise interest rates.” However, it’s not an either/or situation. We need some inflation since we are still in more of a deflationary cycle–this is why I welcome greater quantitative easing on the part of the Fed; there is a lot more Friedmanite monetarist play in the joints than then Keynesians would like us to believe. But the only way that we are going to end up raising interest rates in the near-medium term is if we enter into a period of hyperinflation. And I am more worried right now about deflation than I am about hyperinflation.

  • Rich Rostrom

    According to stats published by the Fed of St Louis, the “monetary base” went from $870 billion at the end of August to over $1.7 trillion at the end of December. I can’t believe that we are not on the verge of massive inflation.

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