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Inflation as a tempting cure?

Leading economists discount the fears of inflation right now. Yet writer Michael Kinsley, noting that gold is up to about $1,140 an ounce from $280 a decade ago, is having nightmares. "Ten percent inflation for five years (if that were possible) would erode the value of our projected debt nicely — but along with it, the value of nonindexed pensions, people's savings, and so on," Kinsley writes in the Atlantic. "The Federal Reserve is independent, but Congress and the White House have ways to pressure the Fed. Actually, just spending all this money we don't have is one good way. Compared with raising taxes or cutting spending, just letting inflation do the dirty work sounds easy. It will be a terrible temptation, and Obama's historic reputation (not to mention the welfare of the nation) will depend on whether he succumbs."

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