Three top US economists urge the Fed to generate higher inflation for years: Mankiw, Rogoff & Krugman. The reason is because INFLATION IS PREFERRED OVER UNEMPLOYMENT.

Economists, Gregory Mankiw, former advisor to Bush, Kenneth Rogoff, former IMF economist, submit that a prolonged period of high inflation is the best way to combat the economic crisis in order to alleviate the onus of the nation’s burgeoning debt — and additionally to promote consumption.

The USA needs inflation, not moderate inflation but rather high inflation…ie much higher than the Fed’s targeted 2% per annum. Gregory Mankiw who was economic advisor to President Bush insists on the necessity to artificially stimulate an increase in prices via non-conventional policies to be implemented by the Fed like PRINTING MONEY.

In accordance with Economist Mankiw are Nobel Prize winner Paul Krugman and Kenneth Rogoff (former IMF economist). All three suggest a wave of high inflation over a prolonged period will facilitate the payment of private debt (e.q. home mortgages) and the national debt. Moreover, the increase in prices would foster greater consumption.

Harvard Professor Rogoff is convinced an inflation rate of 6% for at least two years would disarm the ‘Ticking Debt Bomb’ that menaces the entire US population…in addition to the US government.

Mankiw compares this strategy with the abandonment of the Gold Standard in 1933. He warns that INFLATION IS PREFERRED TO AN INCREASE IN UNEMPLOYMENT, or yet another Stimulus Plan spending even more and exploding the national debt to the heavens.

Rogoff doubts the Administration will increase taxes to reduce the National Deficit. For this reason he believes the Fed will indeed pursue a policy of generating high inflation with a view to reducing the national debt.

“There are hundreds of billions in mortgage debt, consumer debt and national debt.” In this regard Rogoff asks: “Are you willing to put up with prolonged periods of slow economic growth, high savings’ rate and a wave of litigation problems (e. q. monetary foreclosures)?”

The upshot of the above (inflation) strategy will certainly undermine the value of the dollar…and make it difficult to control inflation.

During the 1920s the US economy suffered STAGFLATION (ie recession and inflation at the same time), when prices increased 10% per year. However, the 1970s debacle ended with the abandonment of the Gold Standard, which began the era of the dominant dollar.

In summary, the above article clearly demonstrates that three staunch supporters of President Obama are recommending Washington implement a policy of materially increased inflation to 6% per year for at least two years with the objective of REDCUING UNEMPLOYMENT.

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Source: Translated from Spanish article, “Mankiw, Rogoff y Krugman Animan a la Fed, a Crear Una Inflacíon Alta en EEUU Durante Dos Años,” Júlio 2009 del SPOTLIGHT INTERNACÍONAL.

Since I have not seen the above article in any English news media, I suspect is may have been a White House “leak” to the US Hispanic media…knowing full well it would eventually hit the US English newspapers. Interestingly, the three aforementioned Economists are known liberals, who have long supported Obama (even before he became President). For this reason there is no doubt in my mind the Fed is (covertly) preparing the ground for elevated inflation during a protracted period. Consequently, I am investing in precious metals vehicles to protect the purchasing power of my net worth.

During Obama’s watch the dollar has devalued about 14%, which is the precursor to INFLATION.

THE OBAMA DOLLAR

stockcharts.com/h-sc/ui?s=&p=D&st=2009-02-01&id=p77607749774&a=181616139&listNum=-2

THE OBAMA DOLLAR IS DOWN NEARLY 15%
stockcharts.com/h-sc/ui?s=&p=D&st=2009-03-01&id=p38615656741&a=181616139

BUT THE OBAMA DOLLAR IS GOING MUCH LOWER…TO 63
stockcharts.com/def/servlet/SC.pnf?c=,P&listNum=-2

THE OBAMA DOLLAR should fall another 15%.
In this senario gold will have risen to well over $1500