How Inflation Threatens the Recovery
Posted on AllSides July 26th, 2021
From The Center
ANALYSIS
There are two kinds of inflation. One results from demand growing faster than the economy’s productive capacity, causing the economy to overheat. Call that good inflation, because it is usually linked to a stronger economy. By contrast, bad inflation results from constricted supply which curtails output, driving up prices and eroding incomes, leading to a weaker economy.
Much of the debate over inflation is whether the good sort—i.e., overheating—is about to happen. But investors are signaling that the bad sort is the bigger risk to the economy. As measured inflation...
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