Response to The Death of Inflation

Response to The Death of Inflation-

            The article that was written about is on the decrease in the rate of inflation. This blog post is very well written and easy to understand. It begins explaining that in the 1970’s the Federal Reserve decided to copy England and have high interest rates in hopes to lower inflation. Although this was originally thought to work, “price stability could actually be adding to the rich world’s economic anguishes”. The most recent recession inflation barely changed, even with the affects of the reduction of wage demands and lowering of prices. This was explained well when saying not everything always goes according to plan and you have to know how to deal with it. When unemployment goes up, inflation falls. A good example of this is between 1980-82 when the unemployment rate rose by 6.8% and inflation dropped to 4.5%. At this point it would be good to explain why that happens and if there are anyways to have a happy medium between the two rates. Although it was good to mention that it helps predict our future rates. It was then said that stable inflation rates can be a result of changes in the labor markets with workers leaving the labor market. The explanation that because of this wages and prices are not falling but welfare benefits continuing to rise. This makes it difficult for the inflation rate to fall. This blog does a really good job of showing the link between inflation and economic indicators such as unemployment. The charts in the blog do a great job of helping understand the material while also getting the main point across to the reader. The blog post was written in a way that made it easier for the reader to understand while still being very informative.