Learning From The Inflationary Mistakes Of The Past

“As usual, inflation targeting began in the United States. In 1971, the US cut the link between the dollar and the Gold. Soon other countries followed suit. Inflation started rising to unprecedented levels in the US and the other industrial nations. Like in today’s India, the inflation of the 70’s was blamed on the rising oil prices, and various external factors.

Like in today’s India, many economists had believed that with rising inflation unemployment would fall. Low growth was also associated with high inflation. But, in the 70s, with high inflation, growth fell and unemployment rose.

Economists now generally agree that inflation has no beneficial effects.”

Read my piece, Learning from the inflationary mistakes of the past in Business Standard

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