Yet inflation continued to worsen, peaking at 8.7 in February 2008.

High and rising inflation creates great costs and is difficult to reverse.

In Vietnam, it is even higher and is expected to approach 18.2 this year, and in India it is 5.8 . By contrast, US inflation stands at 3 .

Unemployment fell to 3.8 without any surge in inflation.

During the low inflation era, which dates from the early 1990 s, developed country annual inflation rates averaged 2.4 .

The fact is that around most of the world, inflation and eventually inflation expectations will keep climbing unless central banks start tightening their monetary policies.

In fact, the household savings rate continues to rise.

CAMBRIDGE Inflation is now low in every industrial country, and the combination of high unemployment and slow GDP growth removes the usual sources of upward pressure on prices.

T hat has to subtract growth and could cause core inflation to pick up.

They also believe that the government deficit drives up inflation and interest rates, thereby crowding out other spending by consumers and firms.

And core inflation measures show no sign of accelerating inflation either.

During the low inflation era, which dates from the early 1990 s, developed country annual inflation rates averaged 2.4 . Central bank inflation targets are now normally set at 2 .

Indeed, the government s key economic committee, the Central Work Committee, has concluded that after years of high growth and low inflation, China is on a route to high growth with high inflation.

b Combined effect of inflation and exchange rate changes.

Wages are already falling under the weight of extremely high unemployment rates.

Indeed, output has continued to rise much faster than population.

Those experiencing rising and now double digit inflation will have to raise interest rates, while other high inflation countries will lose export competitiveness.

Or, if these deficits are monetized, high inflation may force up long term interest rates and again choke off economic recovery.

Finally, in order to stand a chance of preventing inflation from increasing much further, real interest rates must, at the very least, be equal to zero or slightly positive.

Inflation and interest rates in Japan lately have been even lower than in the US.

CAMBRIDGE As inflation continues to soar everywhere, maybe the world s central bankers need a jolt to awaken them from complacency.

It also tends to weaken the currency and increase inflation.

This was World War II. Do you know why savings was so high?

Neighboring countries, like South Korea and Singapore, also are recording very high rates of growth.

This was World War Il. Do you know why savings was so high?

Thus, lowering inflation would require reducing the growth rate (if not the level) of these two demand components.

Inflation in Iran is rising, perhaps to as high as 20 .

He is also sometimes given credit for America s low inflation during his tenure.

That is because an increase in the inflation rate causes interest rates on new debt to rise by an equal amount.

Policies that ignore the level of government debt lead to the currency s collapse, depression (due to the resulting disruption of the sectoral division of labor), and high inflation perhaps hyperinflation.

With good communication policy, inflation expectations can be contained, and inflation can be brought down as quickly as necessary.

But the stock market does not guarantee returns it does not even guarantee that the stock values will keep up with inflation and there have been periods in which they have not.

There was little recovery only faster inflation.

In China, for example, inflation is approaching 8 or more.

Interest rates were cut by presidential decree to below the inflation rate.

The Federal Reserve would then have to fight inflation putting upward pressure on unemployment in order to reassure savers and lenders of its willingness to guard price stability.

One problem that's happening now is, although the rates of happiness are about as flat as the surface of the moon, depression and anxiety are rising.

Inflation did, indeed, come down but the real exchange rate rapidly became overvalued.

When inflation began to rise in the early 1960s, the governor James Coyne ordered a reduction in the money supply.

Common previously checked childhood diseases and mortality rates are on the increase.

Why, then, are so many central bankers so worried about low inflation rates?

Holders of long term bonds, for example, must have thought that inflation would come roaring back after the effects of the 1981 2 global recession had passed.

Using RMB appreciation as the primary tool to fight inflation implies accepting a temporarily higher unemployment rate now in exchange for a permanently lower unemployment rate in the future.

Already large disparities in income and wealth will continue to deepen, amplified by higher inflation and financial repression.

Countries that had relatively high inflation rates in the 1990s, such as a number of economies in Latin America and many of those in transition, have continued to bring down inflation.