On Erroneous Views of the New York Times' Economist

Y. B. Karasik,
Thoughts Guiding Systems Corp.,
Ottawa, Canada.
e-mail:karasik@sympatico.ca

Ben Stein, a New York Times' columnist and economist, doubts that a large stimulus package will cause inflation. In "Few Humble Thoughts about the Economy" he writes:

The error of thinking behind this theory is that it does not take into account inertia. Specifically, it does not take into account the different "inertia" of money and products. The volume of money can be increased by any amount in a split second. But the volume of products cannot be increased in a split second significantly. It always takes time. Since a large stimulus will give money into the hands of people and thereby increase demand for products right away, prices will go up because supply, which fell in the recent months in response to weak demand, cannot be increased momentarily.

Not taking into account inertia of things (and especially that different things may have different inertia) is a frequent error in many theories. Inertia is usually associated with something mechanical. But in fact everything has it in a sense. Unfortunately, even those who realize it in quiet times may forget it in the times of urgency when searching for momentary solutions.