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The Big Inflation Scare by Paul Krugman - Article Example

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The author of this article "The Big Inflation Scare by Paul Krugman" holds the upsets in the global political scenario the main causal factor behind the people’s fear of inflation. He asserted that the economic recession is indeed likely to result in deflation instead of inflation…

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Subject: Macro & Microeconomics
Type: Article
Level: High School
Pages: 1 (250 words)
Downloads: 0
Author: evieweissnat

Extract of sample "The Big Inflation Scare by Paul Krugman"

However, this is least likely to cause inflation given the banks are securing money in an attempt to save it because of the universal economic decline. This in itself, is a discouraging factor for the Federal Reserve regarding printing. Also, Debts do not influence the economy. Japan makes an example of it as it incurred huge debts from 1997 to 2003. Despite that, consumer prices in Japan declined. Likewise, the government in Canada and Belgium did not make use of inflation to rid the load of debts.

The general fear of inflation among masses can be fundamentally attributed to the biased consent of economists. Analysis:Krugman is right in his assertion that economic recession will not cause inflation. I support his argument because he has referred to similar cases of Japan, Belgium, and Canada who faced economic decline and incurred debts, yet never inflated the currency. The phobia people suffer from keeps them from investing in a business. People should realize the truth and invest in the business so that the economy may regain its strength.

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