The Financial Times Editorial Board Turns Shrill, Joins the Left Opposition, and Calls for More Economic Stimulus
In recent months, both the European Central Bank and the US Federal Reserve have become more vocal in their desire to raise rates. This temptation must be resisted. The west’s inflation problem stems from the voracious demand from Asia’s new industrial powerhouses. This must give hope that a mild dose of stagflation is simply the temporary symptom of an inevitable economic shift. Squeezing domestic inflation to offset it would be counter-productive. In abnormal times, policymakers should also be alive to the balance of risk between inflation and unemployment. Letting the latter rise and become entrenched at a time of weakness would risk hardening the economic arteries further. The real peril now is a double-dip recession rather than inflation. This is no time for tightening.
When the Financial Times's editors join those of us on the left--they are, after all, not the Labor Times or the Manufacturing Times or the Construction Times or the Natural Resource Times--that is a sign that this is a really scary time indeed.