Tuesday, June 21, 2011

Memories of the Way We Were

The first takeaway message from the early 1980s is that creeping inflation gallops before experts catch it. The second takeaway is that postponing the commitment to tighten hard ensures yet higher interest rates later.
A monetary recession lurks ahead. How high will the rates be? Higher than you think.

I remember when all of this was taking place, but I didn't understand much of it back then.  I remember hearing the term stagflation on the nightly news.  I don't have a lot of confidence that we or anyone understands what's happening in the economy, largely because there are a number of levers that serve to move economic activity one way or the other, and no one's smart enough to sort out which ones work best or worst right now. 

If it were possible to simply remove the oppressive hand of government, I'm sure that would allow for rapidly accelerating economic growth ... but politicians have demonstrated no talent for undoing all the messes they've made.

No comments:

Post a Comment