Inflation is up there with unemployment as one of the main ills you don’t want an economy to come down with. But in fact a growing number of economists are arguing that rising prices are exactly what we need to cure our the current economic maladies. It may not be the best answer, but it could be the easiest one to achieve. The argument for inflation is two-fold. One, inflation would shrink the value of the debts both the government and borrowers have to pay, improving our collective balance sheets. Higher salaries would also make it easier for borrowers to pay back their loans helping banks. Two, and this might be the more important reason now, inflation pushes people and companies to spend money. If you know prices are going to drop or stay flat, then you will delay a purchase.
1. Because Consumers would use extra money to pay off debts.
2. Inflation would shrink the value of the debts both the government and borrowers have to pay
3. Inflation pushes people and companies to spend money.
4. It could raise interest rates.
5. The stimulative effects of inflation are short-lived, but the damage of higher prices can last for a long-time
6. He suggests that government spending should boost the economy and institute a delayed consumption tax. that would end up causing a boost in demand.
7. It could raise money for the government.
8 .It could make things more expensive.
9. The Fed could raise or lower inflation and they would not have to go through Washington to raise or lower inflation.
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