Atrios wrote a few days ago that:
We are currently ruled by central bankers who aren’t just aiming for 2% inflation, which by now we should know is too low (both at the moment and longer term), they think 2% inflation is too high.
The reasons are different in Europe, but here part of the explanation is because a Kenyan Muslim Socialist Democrat is in the White House. If George Bush and a Republican Congress were in charge, they’d be stepping on the gas, and the ex-Maestro would be on the teevee explaining why we don’t need to be worrying about high interest rates when we have record low interest rtes.
I’m not sure whether or not that is true. The fixation with inflation comes to some extent from the fact that high inflation is about the only form of wealth (asset, opposed to income) tax that we have (other than property taxes). If you have a billion dollars and there’s 5% inflation, then in a year, it’s only worth 95% of what it used to be worth. Our Galtian overlords have an extreme aversion to having their wealth taxed. So the fact that most economists — if they’re being honest — believe that printing money (and possibly driving up inflation in the process) is the best way out of this near-recession might be irrelevant with Republicans in power too.
The Very Serious People, especially at Kaplan, have written about how our economy is not a “zero sum game”, that if workers eat enough shit, the confidence fairy will return and raise their wages. In fact, what is happening is that workers are eating shit and not buying anything with their nonexistent wages, and investment portfolios of the wealthy are sometimes suffering as a result. If the Galtians ate a little shit in the form of inflation, good economic conditions might return and raise the value of their assets.
But you’ll never hear that “zero sum game” argument made by the Very Serious.