The Truth About Inflation

by Brian Maher
Daily Reckoning

Light the fuse! Send up the rocket!

Janet Yellen has at last unearthed the key to economic recovery. The answer, said the great and good Ms. Yellen on Friday, is a… “high-pressure economy.”

If we ponder that demand is keeping back the outlook, Yellen honks, “The natural next question is to ask whether it might be possible to reverse these adverse supply-side effects by temporarily running a ‘high-pressure economy,’ with robust aggregate demand and a tight labor market.”

Adding “robust aggregate demand to a tight labor market” is Keynesian for inflation.

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