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Inflation vs. Deflation

In early 2008, government experts feared that inflation might plague the U.S. economy. Now, as 2009 begins, deflation is on their minds. NBR's Scott Gurvey finds out why some economists think the monetary solution to the current financial crisis could make inflation the problem all over again.



Discuss this story on XChange - The NBR Blog.

Related NBR Stories & Links

• 08-27-08: "Money File" - Inflation's Indelible Impression on the Economy
• 08-19-08: "XChange, the NBR Blog" - How Did This Happen?
• 08-14-08: Retail Inflation is Rising
• 08-04-08: The FOMC Will Convene Amid Inflation Fears

External Links/Articles*

• American Enterprise Institute (AEI)
  The AEI is a private, nonpartisan, not-for-profit public policy research institute. This links to a June 29, 2006 article published by AEI titled, "Greenspan's Inflation is Bernanke's Problem."
• Euro Pacific Capital
  Euro Pacific Capital is a "full service, FINRA-registered broker/dealer" headquartered in Connecticut. Peter Schiff, the firm's president, is interviewed in Scott Gurvey's report. Schiff also worked as an advisor to Ron Paul's 2008 presidential campaign. A section of Euro Pacific's website is devoted to "Peter Schiff's Economic Commentary."
• Federal Reserve
  The Federal Reserve is the central bank of the U.S. This links to a December 2003 research report published by the Fed titled, "Monetary Policy in Deflation: The Liquidity Trap in History and Practice." The report discusses "monetary policy in a low interest rate environment" and uses the Great Depression period and Japan in the 1990's as examples.
• U.S. Bureau of Labor Statistics (BLS)
  The BLS is par tof the U.S. Department of Labor. This links to a list of all of the BLS Statistics measuring inflation and prices, including the Consumer Price Index and Producer Price Indexes.
• U.S. House of Representatives (PDF)
  This links to a copy of testimony Lawrence Summers of Harvard University and former U.S. Treasury Secretary under Bill Clinton gave before the House Budget Committee on January 29, 2008. The title of the testimony is "Fiscal Stimulus Issues." One of the questions Summers responds to in the testimony is: "How great is the risk of overheating the economy and causing inflation? Should a decision on fiscal stimulus await definitive evidence that the economy is in recession?" Summers is currently President-elect Obama's chief economic advisor.

*Clicking these external links will take you off the NBR web site on PBS.org. NBR has no affiliation with these sites.