View: Labor and companies will keep pushing up prices without trust

Inflation is fundamentally the outcome of the distributional conflict between firms, workers and taxpayers. It stops only when the various players are forced to accept the outcome. For a straightforward rendering in game theory, Krugman also quoted William Nordhaus, another giant of the economics profession. In the 1970s, he compared inflation to what happens in a football stadium when the action on the field was especially exciting: “Everyone stands up to get a better view, but this is collectively self-defeating.”

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