UnNews:Romer: Inflation is good for America
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8 April 2011
WASHINGTON, D.C. -- Former Obama chief economic adviser Christina Romer seems to be backing higher inflation. "We have tools we can use, and it's shameful we aren't using them," she said last month at Vanderbilt University.
The tool in question seems to be the printing press, as she continued, "It's a mistake to end QE2 in June as planned." QE2, or Quantitative Easing, is the Fed's plan to replace the mountain of IOUs issued to cover the 2009 stimulus package with a mountain of crispy new greenbacks, though there is nothing new for them to buy.
Ms. Romer praises the Fed for already weakening the dollar, which helps overseas sales and "puts people back to work" earning money that is not quite enough to make overseas purchases. Although it is also insufficient to afford gasoline or food, happily, America's "core" inflation rate excludes these luxuries in measuring actual inflation.
Fed chairman Ben Bernanke has said he doesn't see any inflation on the horizon, and that, if he starts to, "We can manage it." And William Dudley of the New York reserve bank said in March that any inflation in gasoline and food is offset by the fact that the price of the iPad2 is the same as the old, less-powerful iPad, which is as good as deflation. Told that "you can't eat an iPad," Mr. Dudley deftly replied that he had already had two for breakfast, and had put a third in his car's gas tank.
Pressed for specific policy recommendations, Ms. Romer recommended a payroll tax holiday--for employers, not workers, such as this year's temporary 2% tax break. She said "firms respond to incentives" and was confident there will be no problem at all convincing the President to stuff cash in the pockets of rich businessmen. After all, it's worth less than ever.
- Aaron Task "Christina Romer: A Weaker Dollar Is Good For America". yahoo.com, April 8, 2011
- John Melloy "Inflation Actually Near 10% Using Older Measure". CNBC, April 12, 2011