Noted Economist Warns Inflation Far From Dead

  • Posted Wednesday, September 03, 2014 at 09:02 PM

TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - The Gold price, recovered from 2-1/2 month lows on Wednesday gaining 0.32 percent to $1,270.10 an ounce on bargain hunting and short covering, while Silver added 0.10 percent to $19.22 an ounce. Gold was under pressure in early trading after Russia's President Putin said that an accord to end fighting in eastern Ukraine could be reached by this week.
 
Ukraine's Prime Minister, Arseny Yatsenyuk, reportedly rejected Putin's proposals on Wednesday before branding Russia a "terrorist state" due to the actions it has taken against eastern Ukraine.  Yatsenyuk also reaffirmed Ukraine's hopes to join the NATO alliance on the eve of a two day summit in Wales.
 
Markets are now focused on the European Central Bank (ECB) policy decision due on Thursday and the U.S. non-farm payrolls report on Friday. The euro hit a one year low against the dollar yesterday based on speculation that the ECB could start at any time, injecting cash into the struggling euro zone economy.
 
The ECB oversees monetary policy for the entire 18 nation euro zone and it remains under intense pressure to do more than just deliver promises to get the economy back on track and inflation off its lows and nearer to its target.
 
Meanwhile, according to Kenneth Rogoff, former chief economist for the International Monetary Fund (IMF), inflation, while asleep for the time being, is far from dead. "Today, high inflation seems so remote that many analysts treat it as little more than a theoretical curiosity," wrote Rogoff for Project Syndicate.
 
Factors that once helped to curb inflation like increased globalization and tech advances, are disappearing, says Rogoff. "Modern central banking has worked wonders to bring down inflation," he writes. "Ultimately, however, a central bank’s anti-inflation policies can work only within the context of a macroeconomic and political framework that is consistent with price stability. Inflation may be dormant, but it is certainly not dead."

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