Obama’s chief economist wants more inflation!


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“There is a right way and a wrong way, always choose the right way.”  Abraham Sabrin (1914-2001)

Jason Furman was Obama’s chairman of the Council of Economic Advisers (2013-2017) and is currently a professor of the practice of economic policy at Harvard.  In an Wall Street Journal op-ed yesterday, “The Fed Should Carefully Aim for a Higher Inflation Target,” Furman asserts, “In the short run, the Fed should be aiming to stabilize inflation below 3%. If it can achieve this goal, then it should shift to a higher target range for inflation when it updates its overall strategy around 2025” (emphasis added.)

Furman’s illogical proposal exemplifies the erroneous thinking in the economics profession in general and at the Federal Reserve specifically. For example, the “natural” inflation rate is below zero, i.e., deflation.  Thus, the Fed’s policy goal to target a 2 percent inflation rate is fatuous.  In a free market economy as the output of goods and services increases prices in general should decline. 

As Murray Rothbard pointed out, “rather than a problem to be dreaded and combatted, falling prices through increased production is a wonderful long-run tendency of untrammelled (sic) capitalism. The trend of the Industrial Revolution in the West was falling prices, which spread an increased standard of living to every person; falling costs, which maintained general profitability of business; and stable monetary wage rates—which reflected steadily increasing real wages in terms of purchasing power. This is a process to be hailed and welcomed rather than to be stamped out.”

Instead of allowing the market to determine prices based on the dynamics of supply and demand within a “stable” monetary framework, the policymakers at the Fed have been injecting newly created money into the financial system to “stimulate” production and employment for decades.  In other words, deflation is to be avoided at all costsbecause falling prices is associated with the Great Depression of collapsing production and widespread unemployment. 

The M2 money supply has boomed from less than $2 trillion to about $20 trillion today. 

Because of the Fed’s obsession with preventing natural deflation, the US economy has seen virtually nonstop price inflation, robbing lower and middle-income individuals and families of their money’s purchasing power since the end of World War II. 

Jason Furman, Fed chairman Jerome Powell and the vast majority of American economists should embrace Ludwig von Mises’s truths about monetary expansion, which are spelled out in his 1949 magnum opus, Human Action.  But given the inflationist ideology embedded in the minds of mainstream economists, Fed officials and their political flunkies, it is up to the masses to demand an end to “legalized counterfeiting.”


My latest piece on the economy was published in Fortune,  This is an update of my 2021 forecast, 


Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle.  Sabrin’s autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.

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