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Wednesday, May 06, 2009

“And that’s why inflation is bad. It F*CKS UP relative prices!”


We need resources to flow out of bloated sectors (real estate and construction first among them, but autos and many parts of the financial sector as well). This is never an easy process. Indeed, it is inevitably painful. But it is necessary to compare that pain, to the pain of alternatives. Distorting relative prices and impeding the flow of resources to higher value uses will only make things worse.


--from “Because it #%@*s Up Relative Prices!” by Craig Pirrong at http://streetwiseprofessor.com/?p=1662.

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