Sense versus nonsense?

In: Uncategorized

17 Nov 2010

A weird argument from David Blanchflower, often seen as one of Britain’s most radical economists, in an article on the Guardian website. As an alternative to the government’s economic strategy he argues:

“(T)here is a better way – five or six years of 5% inflation does the job nicely. That way we get to inflate our debt away and we don’t have to go through all this austerity nonsense.”

I may not have a PhD in economics but it seems to me that if inflation is running at 5% and wage increases are much lower that amounts to a substantial decrease in real incomes. Is that what Blanchflower sees as sensible austerity?