Allan Meltzer warns about inflation
Since the Obama administration began to pump billions of dollars into some of the most troubled sectors of the U.S. economy including struggling financial institutions and automakers, the markets seem to be making a gradual but definite come back—a fact which some take as evidence that the administration’s plan will ultimately be successful in turning around, or at least stabilizing the economy. But in an editorial piece for last Sunday’s New York Times, Allan H. Meltzer, professor of political economy at Carnegie Mellon University and author of the multi-volume A History of the Federal Reserve, offers a thoughtful critique of the possible longer-term consequences of the Obama administration’s fiscal strategy.
Meltzer argues that the Federal Reserve’s strategy of reducing interest rates while flooding the economy with cash from bailouts and government subsidies will cause inflation to rise over the next few years, potentially undoing many of the benefits of the administration’s plan. Read Meltzer’s piece online at the NYT website, or navigate to the press’s website to find out about Meltzer’s books, including History of the Federal Reserve, Volume 1: 1913-1951. The two books comprising the second volume of Meltzer’s work will be published later this year.