Paul Krugman | How Not to Panic About Inflation – The New York Times

Opinion Columnist

Credit…Spencer Lowell/Trunk Archive

“Do you remember the great inflation scare of 2010-2011? It’s an episode worth revisiting, because there’s a good chance that we’ll see a replay over the next year or so.

After the 2008 financial crisis plunged America into a deep recession, both the new Obama administration and the Federal Reserve tried to stimulate the economy, spending hundreds of billions on a variety of programs while buying trillions in bonds. There is now consensus among economists that these efforts were helpful, but it’s also widely believed that they were inadequate (as some of us strenuously argued at the time).

On the right, however, it’s an article of faith that activist government is always bad, even in a crisis. So there were many dire warnings that these efforts to rescue the economy would cause runaway inflation. By mid-2010 there was a palpable sense of frustration among some conservatives that the predicted inflation had failed to materialize.

Then came a few months when inflation seemed to be rising after all. Consumer price inflation reached almost 4 percent; wholesale inflation went into double digits; the average price of commodities like oil and soybeans rose almost 40 percent in a year. Soon Republicans were haranguing Ben Bernanke, the Fed chairman, suggesting that his efforts might “debase the currency.” “

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