Krugman on European Financial Suicide

[David Morris]

He sez below:  "Inflation is bad news. Besides distorting prices, it
erodes savings,
discourages investment, stimulates capital flight"

What saving?  What investment?  What about food and a roof?

Inflation targeting is good, except when it's NOT (when there is NO
inflation in the middle of a severe Recession/Depression). Who can
save or invest when nobody's got money, or jobs?

Relaxing inflation targeting is a *temporary* necessity when demand is
dead because money's out of common circulation:  Print some more
damned money!

On Tue, Apr 17, 2012 at 4:16 PM, alice wellintown
<alicewellintown at gmail.com> wrote:
>
> On Inflation:
>
> Inflation is bad news. Besides distorting prices, it erodes savings,
> discourages investment, stimulates capital flight (into foreign
> assets, precious metals, or unproductive real estate), inhibits
> growth, makes economic planning a nightmare, and, in its extreme form,
> evokes social and political unrest. Governments consequently regard
> inflation as a plague and try to squelch it by adopting conservative
> and sustainable fiscal and monetary policies. Experience and
> convenience have induced most of them to conduct their monetary policy
> by relying on intermediate targets such as monetary aggregates or
> exchange rates. During the past decade, however, seven small and
> medium-sized advanced economies have broken with this tradition of
> using such intermediate targets and have begun to focus on the
> inflation rate itself. This new approach to the age-old problem of
> controlling inflation through monetary policy is known as inflation
> targeting.
>
> [...]
> During the past decade, inflation targeting has been adopted (in
> chronological order) in New Zealand, Canada, the United Kingdom,
> Finland, Sweden, Australia, and Spain. Unsatisfactory experience with
> setting intermediate monetary targets or with maintaining a fixed
> exchange rate prompted this innovation in most of these countries. In
> New Zealand and Canada, the governments initially introduced the
> targets to help with disinflation. The success of these two countries
> in taming relatively high inflation (by industrial country standards)
> spurred in part the adoption of similar policies by the other five
> countries, where, in contrast, the inflation rate was already
> comparatively low.
>
> These seven countries shared a relatively poor record in fighting
> inflation over the past 30 years in comparison with Germany, Japan,
> Switzerland, and the United States. Moreover, market participants
> generally perceived the seven as lacking monetary policy credibility.
> In one sense, inflation targeting was the foundation on which these
> countries sought to build a record of both low inflation and monetary
> policy credibility. In these countries, the inflation rate was the
> overriding objective of monetary policy and was given precedence over
> other objectives, such as the exchange rate or the level of
> employment.
>
>
>
>
>
> On Tue, Apr 17, 2012 at 5:01 PM, alice wellintown
> <alicewellintown at gmail.com> wrote:
>> Well, I don't know what Germans think; I simply made use of an
>> expression. "I'm German on this inflation issue" is an expression that
>> means I'm against raising inflation targets. That's all it means. The
>> expression may be based on a false or stupid reading of what Germans
>> think, but that doesn't matter. Expression needn't any basis in facts
>> to do their work.