What Causes Inflation?

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There used to be a big debate in the profession of economics about what did cause inflation. Most of that seems to have been forgottenwere now it's like we'restarting over, says David Frum. The idea that it's not money is a small minority, and there's always hope out there that it's something else., he adds.

What's so bad about rising inflation? Why should we aim for a rate of 2 percent? Why is it a problem if interest rates are too low--and what do we mean by inflation, anyway? Stanford University's John Taylor talks with EconTalk host Russ Roberts about these questions, the Taylor Rule, why inflation is rising, and what the Fed should do about it. At the end of the conversation, Taylor discusses whether stimulus stimulates and the dangers of the national debt.