Zywicki Speaks on Marketplace
Professor Todd Zywicki was a guest on NPR's Marketplace, where he told Washington Bureau Chief John Dimsdale the Federal Reserve may be considering stimulating a little inflation in the monetary system under the theory that what we owe will be cheaper to pay back if the dollar is worth less, something that would benefit the government as well as underwater homebuyers.
But Zywicki believes this might prove to be a dangerous practice.
"What history teaches us is that once you get a little bit of inflation, you get an upward spiral and it starts to accelerate after that. The controlled burn may not work and you may end up with a forest fire," Zywicki says, adding that runaway inflation would do more harm to the economy.
The Fed steps up, Marketplace, August 8, 2011. By John Dimsdale.