Thursday, February 19, 2009

Conservatives choose inflation as a test of whether the stimulus will be a failure

I've seen conservatives railing against the stimulus package as something that will bring inflation without economic growth, or a return to stagflation. Sounds like we've got a good, Republican-chosen, measurable parameter of whether the stimulus fails. If inflation in the next year or two spikes dangerously far above last year's 3.85% without being caused by something external like an oil shock, then the Republicans turned out to be right. I don't think the absence of inflation by itself proves the stimulus worked, but it will show the downside risk was very low.

Of course, I expect conservatives will attempt to have people forget everything they said about stagflation when the time comes around, but this is one way to make it slightly harder.

For related fun, here are the Republican prophecies of doom at the time of the Clinton 1993 stimulus plan.

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