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High inflation as the goal?

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    High inflation as the goal?

    What this country needs is a good 5% CPI

    Interesting article, but is it reasonable? My understanding is that the goal should be moderate (3-4%) inflation to slowly raise everything, and to ensure that it's a general, broad-based inflationary rise. The author here calls for 5-7% inflation as a way to reduce the overall debt load of both the country (national debt) and its people (consumer debt). Would that actually be beneficial, or is he "tactically ignoring" certain parts of how the economy reacts to high inflation?

    Here's a heretical thought. Maybe we actually need a serious dose of inflation to get this economy moving again -- something like a sustained 5% annual rise in the Consumer Price Index (CPI).
    ...
    The last time we were in this kind of trouble was, of course, the Great Depression. And what really cured the problem was World War II. Sure, it boosted demand for munitions. And it destroyed our economic competitors. But the most visible way it cured the problem was by injecting a massive amount of inflation into the U.S. economy. From 1940 through 1948, the consumer-price index rocketed 70%. Inflation cures a debt hangover. It may be the only known cure. The reason? The value of the debt stays the same in dollars, but there are more and more dollars to go around and pay the debt off.
    ...
    Inflation of 7% a year for five years would reduce the real value of our national debt by nearly one-third.
    Thoughts?
    Last edited by kork13; 06-18-2011, 06:06 PM.
    "Praestantia per minutus" ... "Acta non verba"
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