Marketplace MegaFail Inflation Edition

Frankly, these statements are incredibly stupid. Inflation means prices and incomes are rising at about the same rate. Any increase in salaries will just keep pace with inflation, leaving the consumer with unchanged purchasing power. The only way people who borrow can pay back with cheaper dollars is if the inflation is a complete surprise. If the inflation is expected, it will be part of the interest rate on the loan. Finally, higher housing prices? Give me a break. Even if housing prices rose, the real net wealth in your house wouldn’t change much because the higher price level would eat up the price increase. Continue Reading →

What Is A “Rigid Market?”

The real problem in 1973 was the price controls on gasoline that kept the legal ceiling price below equilibrium. Quantity demanded exceeded quantity supplied and some form of non-price rationing was required. In this case, it was one of the most common forms, namely queues. Period. No economist worthy of the name doubts this. How Marketplace can get things this wrong is, well, a wonderment. Continue Reading →