Replacing a country’s failed currency with a reserve currency such as the dollar – so called “dollarization” – is not as easy as it sounds.
Always ask yourself: when using the term “inflation,” what are you seeking to explain? If it is monetary policy, you are best off looking at monetary statistics. If it is prices, follow the Everyday Price Index. If it is the relationship between monetary policy and prices, follow good economic theory.
Keeping the consumer price level stable in the presence of productivity gains does not mean inflation disappears.
The news has been packed with fake economics for the weeks since the correction in stocks began. Story after story has claimed that rising wages could translate into higher inflation, setting off fear and trembling on Wall Street. These claims have caused anyone with contemporary economics knowledge to slap their heads with exasperation. This is precisely how fallacy lives on and on: it keeps being reported by journalists who don’t know better.
The Fed will try to reduce its balance sheet very, very slowly.
What is inflation?
What comes to mind when you think of inflation? It might be higher prices, less affordability, and something bad that we want to avoid. Yet more expensive goods, which would be seen as a negative for consumers, can be a plus for sellers, as they can charge higher prices.