“We shouldn’t be playing around with inflation. It’s not for nothing Reagan called it “as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” The Fed’s pump priming addiction has got our small businesses running scared, and our allies worried. The German finance minister called the Fed’s proposals “clueless.” When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it’s time for Chairman Bernanke to cease and desist. We don’t want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings. We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.”
Sarah Palin critiqued:
“First off, Reagan’s quote, delivered to a Republican fund raising event in October 1978 — according to the Columbia Book of Quotations — came as inflation was hovering around double-digits.We’ve got a very different situation now, the consumer price index for all items minus food and energy rose 0.8% over the year to September, the lowest 12-month increase since March 1961, the Bureau of Labor Statistics said.
Second, Germany did indeed have a nasty battle with hyper inflation about 90 years ago in the Weimar Republic. But what’s worrying Germany right now is not that their good friends in the U.S.A. will soon be selling bundles of greenbacks by weight, rather it’s that a cheaper dollar is a threat to their own all-important export sector. That’s a legitimate concern for them. But do you really take advice on business strategy from your competitor?
Third, permanently high inflation could indeed erode the value of savings and incomes. But deflation — which is the bigger worry and the reason why the Fed recently announced it is warming up the electronic printing presses — has costs too. It means debts get tougher and tougher to pay off. Last, keep in mind that inflation-scare mongerers have been wrong throughout the entire financial crisis."