hm, so there is this country, facing a declining currency, rising inflation, turmoil in the stock market with large fluctuations in key indices on short terms, real estate market bubble that looks like it might be popping, and concern that risk perception is leading to an acute credit crunch
so... the central bank calls an emergency meeting and does what one should, as they have done before (though never quite so drastically)
Iceland raises interest rates to 15%
inflation is driven by increasing commodity costs and devaluing currency, although, unlike the US, Iceland is seeing some wage inflation to compensate
action worked, for now
More like this
Krugman notes headline price inflation, 5.6% for the year, with an instantaneous rate of over 10%.
But, we are not to panic.
"It’s hard to build models of inflation that don't lead to a multiverse. It’s not impossible, so I think there’s still certainly research that needs to be done.
Unfortunately, Mark Twain's aphorism, "lies, damn lies, and statistics", has been used so many times that it's become trite. But, as I say repeatedly around these parts, you have to understand your data.
"Despite its name, the big bang theory is not really a theory of a bang at all. It is really only a theory of the aftermath of a bang." -Alan Guth
Interesting times, eh? Of course, what we have (as a commodity exporter) is a very strong currency with high inflation, but without (so far) rising wages.