Krugman's Premature Victory Lap

Inflation is the cruelest tax, and it doesn't come just in April. What money the government is kind enough to allow the taxpayer to keep, inflation can destroy. Government creates inflation when the Federal Reserve creates money. That last statement, however, is subject to debate, as different schools of economics disagree over monetary inflation and price inflation. Kevin Williamson asserts: "Inflation happens when the money supply is increased, regardless of whether it shows up in the Consumer Price Index. CPI jumps are not inflation, they are a reaction to inflation." But for some economists, inflation happens when prices rise. Paul Krugman is one such economist. In a recent Times column, "G.O.P. Monetary Madness," Mr. Krugman observed that the Fed's tripling of the monetary base since the advent of the financial crisis in 2008 has not resulted in the "devastating inflation" that economists of the Austrian school warned of: "the predicted inflation keeps failing to materialize."...(Read Full Article)