How to Make Disinflation Less Scary

Source: American Institute for Economic Research
by Peter N Ireland

“Inflation, following four decades of dormancy, has reemerged as the biggest problem facing the US economy today. In comments at last month’s Jackson Hole Symposium, Federal Reserve Chair Jerome Powell put it bluntly but accurately, saying ‘without price stability, the economy does not work for anyone.’ In the same speech, Chair Powell warned that reducing inflation ‘will also bring some pain to households and businesses.’ … Economists are correct in warning the public about the likely costs of disinflation. But leaders within and outside the Fed should not sit back and take these costs as given. The costs are ‘endogenous,’ as economists also like to say. Policymakers can coordinate to make disinflation much less scary.” (09/15/22)