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... why would the differentials spiral? I don't see the cause and effect positive feedback where a larger size of differential causes an increase in the differential.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Fri Nov 19th, 2010 at 05:45:39 PM EST
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Well, my question is why price levels would converge on a steady ratio. Assuming that all states are permitted to engage in fiscal policy sufficient to ensure full employment, I don't have a theory of inflation that permits me to state with any degree of confidence that price levels - rather than, say, inflation rates - will converge on a more or less fixed ratio.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Nov 19th, 2010 at 06:00:57 PM EST
[ Parent ]

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