A Quote by Raghuram Rajan
The government will always tell you that it wants low inflation. The real issue is the horizon over which to bring inflation down.
Related Quotes
The essence of the problem is that the war against inflation is over, ... Ever since 1979 the Fed was fighting a war against inflation, and you always knew which way you wanted the inflation rate to go over the long run -- down.
I think democracies are prone to inflation because politicians will naturally spend [excessively] - they have the power to print money and will use money to get votes. If you look at inflation under the Roman Empire, with absolute rulers, they had much greater inflation, so we don't set the record. It happens over the long-term under any form of government.
Because food and energy prices are volatile, it is often helpful to look at inflation excluding those two categories - known as core inflation - which is typically a better indicator of future overall inflation than recent readings of headline inflation.
The single biggest issue that I'm very sensitive to is inflation. I'm very concerned that this extended period where the interest rates were quite low and stimulated a lot of activity could breed inflation and create a problem for us.
We pay some price when necessary to bring down inflation but that price is temporary and is not large relative to the permanent gain from reduced inflation.
If global oil prices or commodity prices are high, then it is bound to create inflation. So, we should not be too worried if the inflation is created by global commodity prices. When they come down, inflation will automatically come down.
What people today call inflation is not inflation, i.e., the increase in the quantity of money and money substitutes, but the general rise in commodity prices and wage rates which is the inevitable consequence of inflation.
Although low inflation is generally good, inflation that is too low can pose risks to the economy - especially when the economy is struggling.
Models used to describe and predict inflation commonly distinguish between changes in food and energy prices - which enter into total inflation - and movements in the prices of other goods and services - that is, core inflation.
The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.
Perhaps the most important reason to be skeptical of government inflation numbers is that the government, like a fox campaigning to guard a hen house, has many reasons to be disingenuous. As the world's largest debtor, the Federal Government is inflation's primary beneficiary.
The unique aspect of today's monetary inflation is that it is not limited to one country, but a host of countries are all inflating together. As a result of the monetary inflation (when all of the newly created money begins to leave the banks and enter the system), the price inflation will be worldwide.
Low and stable inflation in many countries is an important accomplishment that will continue to bring significant benefits.
During the 1970s, inflation expectations rose markedly because the Federal Reserve allowed actual inflation to ratchet up persistently in response to economic disruptions - a development that made it more difficult to stabilize both inflation and employment.
I'm happy to make returns of 4% to 6% a year on my real estate portfolio. If inflation comes along I'll be able to increase rent and have capital appreciation roughly in line with inflation.
Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
Related Authors
Adam Smith Quotes
Scottish
Economist
Alan Greenspan Quotes
American
Economist
Benjamin Graham Quotes
American
Economist
Friedrich August von Hayek Quotes
Austrian
Economist
John Kenneth Galbraith Quotes
American
Economist
John Maynard Keynes Quotes
English
Economist
Joseph Stiglitz Quotes
American
Economist
Ludwig von Mises Quotes
Austrian
Economist
Milton Friedman Quotes
American
Economist
Muhammad Yunus Quotes
Bangladeshi
Economist
Murray Rothbard Quotes
American
Economist
Paul Krugman Quotes
American
Economist
Richard Thaler Quotes
American
Economist
Robert Reich Quotes
American
Economist
Thomas Sowell Quotes
American
Economist
Walter E. Williams Quotes
American
Economist