Professor Rogoff does not make a persuasive case that all of us will be better off in the long run if inflation is allowed to rise to 6% per year (The I-Word, Ideas: Boston Globe, August 28, 2011: K1, K3.
It seems to me that two groups will be experience significant collateral damage. Poor people who have had stagnant real wages for over a decade will probably experience stagnant money wages for the next few years so will have to buy more expensive (due to inflation) necessities.
At an inflation rate of 6%, seniors see their assets depreciate by about 30% over the next six years. Many of these are the people whom Professor Rogoff hopes will engage in accelerated discretionary spending to help the economy out of its slump.
I would suggest that, after being battered by the Stock Market, these people will be more likely to increase savings to maintain their assets in real terms. Thus the foundation upon which Professor Rogoff builds the engine of recovery is flawed.
Sent to Boston Globe