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Washington to Wall Street

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Kudlow's Quick Take

Yellen's Low-flation Nonsense. Higher prices are not the way to a better economy.

 
By By Lawrence Kudlow April 14, 2014

Will somebody please explain to me how rising inflation is somehow going to extricate us from the tepid economic recovery? I don't get it.

It used to be hypothesized that low inflation was the key to high economic growth. For everybody in the economy, low inflation was a tax cut. Conversely, rapidly rising prices were thought to penalize the economy by placing a tax-hike effect on investors, businesses, and families. It was this logic that spurred Paul Volcker (especially) and then Alan Greenspan to labor mightily in the 1980s and 1990s to bring inflation down

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