Hacker News Reader

Comment by zozbot234 | Hacker News Reader

> My understanding is that with stagflation the better policy is to accept the inflation.

Accepting sustained inflation is always dangerous; it's exactly what we did in the 1970s. Letting it run up even further now just means a bigger recession later.

View on HN

I still think it's the least bad option. I prefer two recessions to a depression.

If you get sustained inflation, the ensuing contractionary policy will have to be much, much harsher than if you nip it in the bud.

We are also not currently in recession, so I don't know what you mean about contracting while we are in a recession.

What was the extremely harsh correction to the high inflation of the 1970s and 1980s. I don’t recall more than a minor recession in the 1990s. Perhaps you’re from a different reality than me?

I am not sure why you think this would be in the 90s.

Volcker is well known for his harsh correction, I don't really know what to tell you. We have lived through very unusual recessions recently, but that doesn't make the one in the 80s (where unemployment went over 10%) not bad.

https://en.m.wikipedia.org/wiki/Early_1980s_recession_in_the...

First quarter gdp was negative, we could very well be in a recession and not know it.

The fed should be targeting nominal GDP, which is currently way too high. First quarter GDP was negative because inflation expectations are running amok.

Reply on news.ycombinator.com