Inflation Not the Answer to US Financial Crisis
Wolfgang Münchau, Euro Intelligence | May 25, 2009
There are increasing calls from economists to use inflation to solve the financial crisis by keeping US interest rates artificially low. ++ They say it would reduce the real level of debt, and allow a faster recovery. ++ But inflation is "not some lightbulb that a central bank can switch on and off - it works through expectations." ++ Using it in this way could lead to a double dip recession; affect other countries as well as the US bond markets therefore the US Dollar, and the credibility of the Federal Reserve.
