Bloomberg reports Evans Says Fed Must Convince Public It Will Allow More Inflation.
The Federal Reserve should take a more aggressive stance toward boosting inflation and stop talking so much about using interest rates to ensure financial stability, Chicago Fed President Charles Evans said.
Evans expressed concerns Wednesday that the public was losing faith in policy makers’ commitment to bring inflation back up to their 2 percent target.
The central banker has consistently argued for a slower pace of interest-rate increases than many of his colleagues on the policy-setting Federal Open Market Committee.
“In order to dispel any impression that 2 percent is a ceiling, our communications should be much clearer about our willingness to deliver on a symmetric inflation outcome, acknowledging a greater chance of inflation at 2.5 percent in the future than what has been communicated in the past,” he said in remarks prepared for a speech in London.
Two Asinine Economic Theories
- There is a need for inflation
- The Fed can achieve it by talking about it
For proof of number 2, look at Japan.
In regards to point number 1, the BIS agrees that routine price deflation may be beneficial.
BIS Deflation Study
My Challenge to Keynesians “Prove Rising Prices Provide an Overall Economic Benefit”has gone unanswered.
The BIS did a historical study and found routine price deflation was not any problem at all.
“*Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive*,” stated the study.
For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?
…click on the above link to read the rest of the article…
