Tuesday, 2 May 2017

Central Banks' Obsession with Price Stability Leads to Economic Instability

By Frank Shostak

For most economists the key factor that sets the foundation for healthy economic fundamentals is a stable price level as depicted by the consumer price index.

According to this way of thinking, a stable price level doesn’t obscure the visibility of the relative changes in the prices of goods and services, and enables businesses to see clearly market signals that are conveyed by the relative changes in the prices of goods and services. Consequently, it is held, this leads to the efficient use of the economy’s scarce resources and hence results in better economic fundamentals.

Read the full article here.

Also see: 

The Contradictory Missions Of Central Banking: Stable Price Inflation And Economic Stability

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