If PEOPLE expect high inflation and raise WAGES to REFLECT the high inflation, then it BECOMES self-fulfilling.

Venezuelans are TIRED of 14 years of promises and no results. The only THINGS GROWING are INFLATION, murder and crime. The GOOD indicators - production, education and jobs - are all falling.

I might say that when the settlement was MADE the Nixon administration issued what they called a second inflation ALERT in which the GENERAL Motors settlement was BRANDED as being inflationary and bad for the COUNTRY.

Each money-printing exercise brings about unintended consequences. These unintended consequences are HIGHER INFLATION RATES than had no money been printed.

Of course, looking TOUGH on inflation is PART of any central banker's job description: if INVESTORS believe that inflation is going to GET out of control, you end up with higher interest rates and CAPITAL flight, and a vicious circle quickly ensues.

Businesses that have gone through an episode of hyperinflation become understandably alert to the THREAT of it: at the FIRST hint of inflation, they're likely to increase PRICES, since they've learned that if they don't, and inflation HITS, their businesses will be wrecked.

Models used to describe and predict inflation commonly distinguish between changes in food and ENERGY PRICES - which enter into total inflation - and movements in the prices of other GOODS and SERVICES - that is, core inflation.

Food and energy account for a significant portion of household budgets, so the FEDERAL RESERVE's inflation objective is DEFINED in TERMS of the overall change in consumer prices.

One DAY we will have more inflation, and our bonds will bleed like a pig. The only reason for BUYING long bonds is short-term or as a desperate haven for terrorized investors. But the potential to make longer-term REAL MONEY is NAUGHT.

Below-target INFLATION INCREASES the real value of debts owed by households and businesses and reduces the ABILITY of central banks to respond to downturns.

This unchecked spending is GROWING FASTER than our economy, faster than INFLATION, and far beyond our means to SUSTAIN it.

Product downsizing in the FACE of inflation in order to MAINTAIN retail price POINTS has LONG been used by food companies, notably manufacturers of candy.

One of the arguments I make for the failure of the euro is that, at the time it was being constructed, there was a 'neo-liberal' ideology which SAID that all we NEED to do to make this thing WORK is to get deficits low, KEEP INFLATION low, and take down barriers, and then everything would be fine.

And I am CONVINCED that a single FOCUS on preserving the purchasing power of the dollar, in effect, guarding against inflation or deflation, ACTUALLY creates a solid foundation for the greatest JOB GROWTH and the strongest economy that America can have.