The Case for (a Moderate Amount of non-Accelerating) Inflation

Chris Hayes has a policy paper out for New America trying to drive an idea that’s been discussed a fair amount in academic circles but doesn’t seem to have gotten much political purchase, namely that we need some more inflation in the United States over the medium-term:


The idea is basically that if we could sustain a five or six percent inflation rate for a period of years, that would make it much easier to work off the debt overhangs—both in the public and private sectors—that otherwise threaten to hobble the economy for years. You would need, of course, to try to be sure that this doesn’t spiral into accelerating inflation. But the point is to move beyond the kind of anti-inflation hyper-vigilance that came into vogue after the Great Inflation of the 1970s. That mentality was an understandable reaction to what had happened, but the fact that an out-of-control wage-price cycle is a bad thing doesn’t mean that inflation should always be kept as low as possible. A moderate amount of inflation could do a great deal to help us.