David Frum’s essay on Rush Limbaugh winds up making the excellent point that there’s an issue these days in which the conservative movement is hard-wired to offer solutions to the problems of the 1970s when, whatever you think about the solutions they offered at that time, today’s problems are totally different. Exhibit A for that trend could be this Larry Kudlow post at the Corner warning that current policy is going to produce inflation. This is like worrying that Barack Obama’s defense budget is showing weakness and likely to leave us open to aggression from Martians.
We have actual statistics about inflation, which show the core CPI increasing by just 0.2 percent in February. Inflation is very low. Very recently there was a very real threat of deflation, and expansionary policy has been aimed at preventing that from happening. Meanwhile, we have very good policy tools at our disposal for curbing inflation should it start to reach problematic levels.
At the moment, however, not only is deflation a bigger worry than inflation, but a modest (albeit non-accelerating) amount of inflation would probably be beneficial as it would help firms and households get out from under the load of debts they’re currently dealing with.