The Big Inflation Scare by Paul Krugman - Book Report/Review Example

The author insists that there is no influence of debts on the economy and supports his argument with the practical example of the Bank of Japan which went under a load of huge debts between 1997 and 2003 and yet the consumer prices dropped. Krugman also referred to the examples of Belgium, Canada and Japan whose debts exceeded their G.D.P.s and yet the governments never inflated the debt to get rid of it. Krugman reiterates that much of the fear of inflation in masses has been developed by the economists who have exaggerated the matters in a biased way.

Significance of the article to the current business climate:The present era is an era of an economic recession that is widespread all over the world. This recession has largely resulted from the upsets in the global political scenario and has affected the economy of a vast majority of countries. The biggest victims of the widespread economic recession are the corporate businesses that have shrunk to extinguishment. People are reluctant to invest money in businesses because there is not enough room for growth, given the scarcity of dollars in the market.

But the concept of economic recession has been over-exaggerated universally. People are caught in ambiguities and are saving money for the worse times to come. As Krugman has pointed out in his article, it is evident from the history that economic recession has never been the fundamental cause of inflation, hence people need to realize this fact and overcome their fear of inflation. Conclusion:To conclude all that has been discussed above, it is not actually the inflation that is the real cause of the issue, it is instead the universal fear of inflation that has actually affected the international economy in an adverse manner by suppressing the business and cash flow.

The realization of this truth on a global level may bring a positive change in the current international financial scenario.