Fed’s Lacker says don’t ignore inflation down the road

December 3, 2008 by · Leave a Comment
Filed under: Policy News 

I agree with Lacker’s assessment on inflation and how we should have our long-term strategy in mind at all times as well.  While we have asset classes falling in value, the likeliness of us having run-away inflation is much lower.   With all of the money we have deployed in our system, when we do have a recovery, we will see some serious inflation that we have not seen for a long time in this country.  So when you see prices skyrocket, then you know that you are now paying for the U.S. bailing out failed financial institution and failed industries.

News:

Richmond Federal Reserve Bank President Jeffrey Lacker said on Wednesday the economy should begin to pick up next year and warned that policy-makers must not ignore inflation with conditions set for recovery.

“While it may seem premature to be worrying about how inflation behaves after the recession is over, we need to be sure our policy remains consistent with a strategy that does not allow inflation to ratchet up over the business cycle,” Lacker told the Charlotte Chamber of Commerce.

 

“It strikes me as reasonable to expect the U.S. economy to regain positive momentum sometime in 2009,” he said in prepared remarks, adding that growth would be helped by “quite stimulative” monetary policy and lower energy prices.

Source: Reuters

 

Bloomberg Video on Zero-Interest Rate Policy

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