IDEAS: Indexing v. Inflation

Seeing little chance of caging runaway prices, a growing number of experts have recently been urging that nations find some way to live with them. A band of conservative economists led by the provocative Milton Friedman of the University of Chicago are vigorously touting "indexing," a system that in theory preserves the buying power of money by tying all paper values to a price indicator. For example, if prices rise 7%, so does everything else: wages, prices specified in long-term business contracts, interest rates on bonds, savings and mortgages. Even taxes are included: a person whose salary rises 7%...

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