🚀 go-pugleaf

In article <1jngr2INNfq7@darkstar.UCSC.EDU> david@cats.ucsc.edu (David Michael Wright) writes:

>Unanticipated inflation is, in general, a good thing: if wages are
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>sticky it gives you the opportunity to work if the real wage is
>reduced, it makes you economize on money balances so you invest more,
>it reduces debt and thereby makes it easier to invest, it gives a
>signal that the economy is improving (which it may be for the
>reasons above or not) and so boosts consumer confidence. Moderate inflation 
>has nearly always been associated with rising output.
>
>Of course, high inflation, or too variable an inflation rate, makes it
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>impossible to judge the difference between real and nominal prices,
>and so the whole economy can go down the tubes. Anticipating this
>event also is disasterous.


These statements are contradictory. If the inflation rate is not
variable, then the inflation will be anticipated, assuming a modicum
of intelligence among the population. Furthermore, in the first
paragraph you indicate that sending false signals about the economy
is good, while in the second you say it can make the economy go down
the tubes... Are you maintaining that deceiving the population with
respect to some matters is good, while in other matters its best to
let them known the truth?

You also fail to explain why solving the problem of "sticky" wages
via inflation is preferable to solving it some other way. 

    Radford Neal