Harvard professor sees threat of inflation by next year!
NEW YORK - April 23, 2009 - Harvard University economics Professor Martin Feldstein said inflation will emerge as a threat to the economy after a sustained recovery develops next year.
“In the next few years inflation is going to be the bigger problem” than deflation, or widespread declines in consumer prices, Feldstein said in an interview with Bloomberg Radio. He also said “we’re not going to see a sustained turnaround in the economy until next year.”
Feldstein, a former head of the National Bureau of Economic Research and adviser to President Ronald Reagan, warned that the Federal Reserve will have a challenge in heading off inflation because of how it’s conducted monetary policy during the crisis.
Instead of expanding the central bank’s balance sheet by purchasing easy-to-sell Treasuries, the Fed has snapped up mortgage securities that are likely to be tougher to use as a tool to soak up cash, Feldstein said.
