You're watching...
Former Dallas Fed chief economist Michael Cox on how a little bit of inflation can be a cure for a recession.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Begins aren't as we wait let's bring back Michael Cox former chief economist of the Dallas Federal Reserve but about inflation projection here because they trend that as well they have -- for the full year it would be 2% now we're looking at one point 5%.
I -- that's good news I mean that makes it feel like there's more stalling out there being economy maybe we need a little inflation at this point to get things rolling what's your take.
I completely agree I think that in fact I think the Fed wants more inflation than they're getting.
I believe they want inflation in the range of four -- 6% you'll never hear them say that wow what brought in those at a little bit of inflation.
Is secured to a lot of recession that's what the history shows.
All the way back to the Great Depression if you haven't.
We had about three point 8% -- place on on average from 1913 to today.
And if you look back -- historic historically what happened to the business cycle after that the business cycles calm down.
I don't think the -- been able to achieve what they want it despite the fact they've tried.
And the reason is because -- money demand is growing so fast now relative to my supplies all this.
These interest rates are low with the people say what's the wanna put my money in stocks I'll just an apartment a savings account.
And also the money is coming in from the great debacles so.
And that money demand is growing faster the month supply and that's what's holding inflation down.
This whole -- of numbers that they put out this afternoon and I think is really worries have I mean it isn't this worse spend.
What you thought -- -- gonna see today.
No it's not -- -- and I actually don't I don't think it's worse than what most people thought we're gonna see today the business leader talked talked to were not expecting good news.
Nobody's expecting good news until we get some change something happens to make things better there's no reason for things get better based on these economic policies.
So I think date of November 6 is probably the most important day in American history and -- Stuart Taylor -- -- -- I'm Michael less than two minutes before the Fed chief speaks -- even get at least one more comment from you.
-- the FOMC timing of policy firming you have more members.
Now saying pushing it out to 20142015.
Is the best -- what's your take on -- -- we just gonna print our way out of this.
Economic don't know from.
Well what will -- if you.
If we could we would but we can't do that means -- everybody knows that money is does not -- not a cure for hard times inflation just makes things worse.
We need a little bit of inflation right now because as inflation rate goes up the real estate price will -- -- rise even faster.
That would come in and under short of values of things after the value of real estate will start to rise.
And that will be good for the economy because that's were -- the softness has been is in the property market and so on.
That will help to build people's wealth a little bit on the real state side and then the interest -- we'll start to rise to reflect inflation expectations and after the interest rates starts rise.
To a two and you'll see we'll get out of liquidity trap.
Banks will start lending against I think part of the solution this problem a big part of it is some inflation not a lot because you're not too much inflation is certainly bad for the economy.
But we know deflation is that is bad -- and low inflation is a sign of weakness we need four -- 6% inflation right for 23 year.
-- -- -- suggest T what's the best way politically to stoke inflation.
What we've got to go back to another QE we had QE1 QE2 it's always what way to do it now -- QE3.
-- -- you know increased we've got that Ben Bernanke approaching the podium let's listen it gives a press conference my costs thanks to you.
