In recent years we've witnessed simultaneously low rates of inflation and unemployment: a bullish combination (for equities) and the opposite of the bearish “stagflation” seen in the 1970s. Yet for many decades economics textbooks and professors have taught a bogus, Keynesian-inspired “Phillips Curve” which assumes an inverse relationship between inflation and unemployment.
The Phillips Curve denies the possibility both of fast, low-inflation economic growth, and its opposite: inflationary recessions. It insists, against ample evidence, that inflation (the depreciation of money) is caused by real factors: an “excessive” rate of economic growth (an “overheating” economy) and a “too-low” jobless rate.
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