The Big Inflation Scare by Paul Krugman - Article Example

The author reiterates that the influence of debts on economical strength is very little and gives the real example of the Bank of Japan, that incurred large debts in the period between 1997 and 2003. Despite that, consumer prices declined. Krugman also put forward the examples of Canada, Belgium, and Japan whose debts significantly crossed their G.D.P.s, and still, the governments never thought about inflating the debt in order to finish it. Krugman emphasizes that the fear of inflation among the public has been mainly inculcated by economists who have adopted a biased approach towards the matter.

Krugman’s argument in light of the current business environment:The present age is an age of economic decline that has occurred globally. The global economic decline has fundamentally surfaced as a result of upsets in the political scene all over the world, and the economical health of many countries has deteriorated. The area that has suffered the most because of the present economic recession is a corporate business that has declined to extinguish in many countries. People are not willing to invest money and other resources in business because they see little room for the expansion of the business.

People are aware of the fact that the market is currently suffering from a scarcity of dollars. Although the economy has faced a recession in recent years, yet many factors have played an important role in creating unnecessary tension that has adversely affected the business. People have developed ambiguities and tend to save money for the expected worse times. Krugman has rightly conveyed through his article that the economic recession has little to do with inflation and has supported his argument with practical examples from history.

Having read the article and known the truth, people should abandon their fear of inflation and safely invest in the business.