Fed’s dilemma: Inflation is healthy for the economy – but too much can trigger a recession
- Written by Richard S. Warr, Professor of Finance, North Carolina State University
In a healthy economy, prices tend to go up – a process called inflation.
While you might not like that as a consumer, moderate price growth is a sign of a healthy, growing economy. And, historically at least, wages tend to go up at about the same pace during periods of inflation.
The U.S. Federal Reserve sees 2% inflation as the sweet spot...