Comparing inflation in 21st century vs inflation in 20th centurySubmitted by deng on Thu, 02/07/2013 - 17:24
Inflation has been used - rightly, or wrongly - to estimulate the economy. The logic is that as people have more money they will start purchasing cars, computers, services, etc. and factories,workers,IT people will in turn be reactivated starting the economy. After the economy has restarted money printing can stop.
Even if, arbuably, this policy worked in the past in modern times this will not work. Government starts printing money, now people have more money and they will spend it in cars that come from overseas, computers produced in china, services outsourced somewhere else. The economies of Asia, Europe, Latin America.. will benefit but the local benefit would be marginal at best.