Thursday, September 23, 2010
Inflation or Deflation?
From 1979 to 1987 he was Fed Chairman. During his tenure, he raised the Fed Funds rate, from a low of 8.34% to the peak of more than 21%, in his strategy to create a recession that would stall inflation wreaking havoc on the US economy. Paul Volcker, now chairman of the president’s Economic Recovery Advisory Board, had this to say recently about the current risk of inflation. “We’re in a situation right now where we’ve got a sluggish economy, a lot of excess resources, a lot of unemployment,” he said. “This is not an atmosphere that’s inclined to produce inflation. I think we ought to be sure that we don’t take actions that down the road might lead to an inflationary situation.” He was also asked about his concern for deflation. “I do not think we should be worried about and consumed by the problem of a potential deflation that doesn’t exist,” he said. Here is a link to the article these quotes are taken from.