I think the inflation prospects for the U.S. over the next five or six, seven years, are quite serious. You cannot have a bumper crop in apples without the value or the price of each apple falling. The Fed has had the largest increase in the monetary base in the history of the U.S., from colonial times to the present, times ten.
With the shrinking of the US economy, and it's shrinking very rapidly, you not only have more money, but you also have fewer goods. That's a classic double-whammy on inflation.
Ask me whether inflation represents longer-term problem. I think there's a potential there for excess reserves to create problems.
I feel very uncomfortable with respect to looking at inflation.
The higher interest and higher inflation is a vicious cycle.
Near-zero policy rates that may be considerably expansionary in an economy with high inflation could be contractionary when inflation is too close to zero, or worse, deflation has set in.
This persistence as private firms continued because it ensured the maximum of anonymity and secrecy to persons of tremendous public power who dreaded public knowledge of their activities as an evil almost as great as inflation.
Paul Volcker is a tremendous hero with the Federal Reserve system and for the American economy. He took very tough actions and helped to break the back of double-digit inflation at a time when it had to be done.
There is nobody who would want, in any way, to lose what Paul Volcker won for the American people by fighting inflation and achieving price stability.
During the slow recovery after the Great Recession, inflation was very low, and it took us a while to get it back moving up.
