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The Fed has a 2% inflation target (used to be their only stated target, now they balance unemployment in their target numbers as well). This allows companies to
by bluedevil2k 5y ago
The Fed has a 2% inflation target (used to be their only stated target, now they balance unemployment in their target numbers as well). This allows companies to plan ahead knowing with a fair degree of accuracy the expected change in purchasing power year to year.
- adolph 5y agoThat sounds like the answer to your own question, no? The root comment proposes that "They just create the money they need, the never-to-be-paid-off deficit grows, the value of the dollar shrinks, and we move on." How is that incompatible with an inflation target that "allows companies to plan ahead?"
- bluedevil2k 5y agoNo, not at all. How much will they print? 23% of GDP? 18% of GDP? That’s $1T difference in cash. How will that affect inflation? Who knows, no one can predict that. A shrinking dollar is bad for imports and America has a huge trade deficit right now, it would cripple international trade.
- landemva 5y agoTough luck that until some months ago, USA was a net energy exporter. Definitely do not want to ask why energy exports flipped to energy imports. Recall that a few days ago Joe asked Saudis to help out by pumping more oil.
- adolph 5y agoI guess it is all academic since inflation acts as a tax on savings. Going to get taxed one way or another.
- landemva 5y agoCongress created the private contactor known as Federal Reserve with mandate for employment and stable prices. 2% inflation, which violates the mandate and Congress does not care, compounded every year is why purchasing power since 1913 is aiming for the dirt.