Republicans cite Kenneth Rogoff, or at least Rogoff’s ideas, constantly. Rogoff is the Harvard economist who, with Carmen Reinhart, developed the thesis that debt greater than 90 percent of national income threatens the economy, a statistic that fiscal hawks love. Intentionally or not, Rogoff has provided important intellectual backing for any member of Congress who opposes deficit spending — if not for the 90 percent statistic, telling a story in which near-term deficits harm job creation is much more difficult.
It would be interesting to know how those congressmen who do lean on Rogoff’s findings would interpret his proposal for ending the recession [emphasis added]:
In my December 2008 column, I argued that the only practical way to shorten the coming period of painful deleveraging and slow growth would be a sustained burst of moderate inflation, say, 4-6% for several years. Of course, inflation is an unfair and arbitrary transfer of income from savers to debtors. But, at the end of the day, such a transfer is the most direct approach to faster recovery. Eventually, it will take place one way or another, anyway, as Europe is painfully learning.
Some observers regard any suggestion of even modestly elevated inflation as a form of heresy. But Great Contractions, as opposed to recessions, are very infrequent events, occurring perhaps once every 70 or 80 years. These are times when central banks need to spend some of the credibility that they accumulate in normal times.
He’s not exactly on the same page as the “sound money” crowd.