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Also Planet Money did an episode[1] about how the 2% target came about. Essentially it was a guess. IMO it’s too conservative. Some economists have argued for a

Also Planet Money did an episode[1] about how the 2% target came about. Essentially it was a guess. IMO it’s too conservative. Some economists have argued for a 4% target, and I think it would be better for growth and equality. [1] https://www.npr.org/sections/money/2018/11/30/672366380/episode-879-the-secret-target https://www.npr.org/sections/money/2018/11/30/672366380/epis...

hcurtiss 5y ago
I don't know what "equality" means in this circumstance, but for those nearing retirement age, 4% inflation would destroy the value of their savings at a time when they cannot afford to take additional risk in equities with no guarantee they'd perform. Inflation robs the value of a lifetime of prudence and hard work. There's an argument it's truly evil.
- poopypoopington 5y ago
  Wealthy people hold investments that make let's say 7% a year, while working class people make $x a year that grows probably much less than 7% a year. So if inflation is higher, wealth inequality grows less quickly, or in some cases can shrink, as was the case after the world war, because Europe was destroyed so inflation was rampant which actually created a lot more equality. Same thing happened after the Black Death in Europe. It's painful in the short term but can help reduce wealth inequality. Also I wonder if people on a fixed income like social security might be able to stave off the effects of this if social security grew at inflation. Thomas Piketty's book capital is a great source for this^
  - webinvest 5y ago
    Many of their investments make 3% or less. How many seniors do you know that have more stocks than cash or bonds? Seniors are very risk adverse.
  - briefcomment 5y ago
    > "working class people make $x a year that grows probably much less than 7% a year. So if inflation is higher, wealth inequality grows less quickly" How does wages not keeping up with inflation decrease inequality?
    - satya71 5y ago
      Wages tend to keep up with inflation. Idle assets on the other hand don’t.
      - briefcomment 5y ago
        My wages have certainly not kept up with houses, land, crypto, or anything scarce really. Those idle assets seem to be capturing all the gains.
      - tolbish 5y ago
        Wage gains have gone to the highest tier workers, not the lower/middle class.

hcurtiss 5y ago

I don't know what "equality" means in this circumstance, but for those nearing retirement age, 4% inflation would destroy the value of their savings at a time when they cannot afford to take additional risk in equities with no guarantee they'd perform. Inflation robs the value of a lifetime of prudence and hard work. There's an argument it's truly evil.

poopypoopington 5y ago
Wealthy people hold investments that make let's say 7% a year, while working class people make $x a year that grows probably much less than 7% a year. So if inflation is higher, wealth inequality grows less quickly, or in some cases can shrink, as was the case after the world war, because Europe was destroyed so inflation was rampant which actually created a lot more equality. Same thing happened after the Black Death in Europe. It's painful in the short term but can help reduce wealth inequality. Also I wonder if people on a fixed income like social security might be able to stave off the effects of this if social security grew at inflation. Thomas Piketty's book capital is a great source for this^
- webinvest 5y ago
  Many of their investments make 3% or less. How many seniors do you know that have more stocks than cash or bonds? Seniors are very risk adverse.
- briefcomment 5y ago
  > "working class people make $x a year that grows probably much less than 7% a year. So if inflation is higher, wealth inequality grows less quickly" How does wages not keeping up with inflation decrease inequality?
  - satya71 5y ago
    Wages tend to keep up with inflation. Idle assets on the other hand don’t.
    - briefcomment 5y ago
      My wages have certainly not kept up with houses, land, crypto, or anything scarce really. Those idle assets seem to be capturing all the gains.
    - tolbish 5y ago
      Wage gains have gone to the highest tier workers, not the lower/middle class.