Inflation and Credit Money: Why Money Helicopters Don’t Matter

"Inflation is always and everywhere a monetary phenomenon." Milton Friedman, A Monetary History of the United States

In Black Swans and Money Helicopters: Staying Ahead in a Nonlinear World, Daniel Stachkov laid out the monetarist case for a growing threat of inflation as a result of the dramatic monetary response of the Federal Reserve Bank to the credit crunch. Citing the empirical work of Milton Freidman, Daniel’s thesis was that this rapid monetary expansion would lead to inflation roughly one to two years after said expansion took place. Given the high debt load of U.S. consumers and the U.S. government, raising interest rates to fight the inflation would be very difficult and the coming round of high inflation would therefore last for a while.

In Inflation and Credit Money: Why Money Helicopters Don't Matter, Dr. David Mieczkowski takes an opposing viewpoint. He believes there is a much greater probability for a prolonged period of deflationary pressures, that interest rates on both the long and the short end will remain low for some time as a result, and that, if we do end up with some moderate inflation in the near term, it would be beneficial.

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