To say that Harvard’s Jason Furman believes mass unemployment and bankruptcy is the answer to inflation is a waste of words. Which is why most illuminating in his latest piece of public commentary was his assertion that “Higher inflation also helps the Fed stimulate investment, because any given nominal borrowing cost becomes less onerous when businesses can count on future price increases to meet it.” This insult is incorrect.
For one, it assumes that what economists imagine inflation to be happens without it changing the lending incentives of savers or intermediaries for savers, plus Furman’s droolings quite simply ignore reality: in the real world of commerce investors don’t reward businesses allegedly hiding behind inflation to raise prices, but they do reward the companies relentlessly pushing prices down. Conventional economists (the vast majority) never disappoint.
Read the full article at Forbes
