{"id":14185,"date":"2015-11-05T13:45:40","date_gmt":"2015-11-05T18:45:40","guid":{"rendered":"http:\/\/olduvai.ca\/?p=14185"},"modified":"2015-11-05T13:45:40","modified_gmt":"2015-11-05T18:45:40","slug":"the-feds-2-inflation-fairytale-who-made-it-up-and-what-does-it-mean","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=14185","title":{"rendered":"The Fed\u2019s 2% Inflation Fairytale\u2014\u2013Who Made It Up And What Does It Mean?"},"content":{"rendered":"
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The Fed\u2019s 2% Inflation Fairytale\u2014\u2013Who Made It Up And What Does It Mean?<\/a><\/h3>\n

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Once upon a time, not too long ago, central bank wizards began telling a fairytale that economies need inflation. But not just any inflation. In their Goldilocks make-believe world, the not too hot, not too cold, just right dose of two percent is needed to keep an economy healthy.<\/p>\n

While there is absolutely no quantifiable data or economic model that proves or supports this oft-cited fairytale, the business media keep repeating it, selling the fiction that a two-percent inflation rate will somehow create jobs and spur economic growth.<\/p>\n

\u201cWorry Over Low Inflation Kept Fed at Bay,\u201d screeched the\u00a0Wall Street Journal,<\/i>\u00a09 October headline, following the release of Federal Reserve minutes in which they decided not to raise interest rates.<\/p>\n

Who made this up? How is inflation \u2013 paying more for goods and services \u2013 the perfect financial tonic for working people to swallow?<\/p>\n

In the United States, for example, with wages trending between decline and stagnation, more inflation means paying more to get less. With median household income below 1999 levels, how can higher inflation stimulate more spending? How can higher inflation be beneficial when, according to new Social Security data,\u00a063 percent of Americans make less than $40,000 per year?<\/p>\n

As dismal as those numbers are, in countries around the world where unemployment is much higher and real income and wages have fallen more dramatically, central bank charlatans persist with their \u201cwe need inflation\u201d refrain.<\/p>\n

A headline in the\u00a0Financial Times<\/i>\u00a0read: \u201cEurozone\u2019s small rise in prices misses ECB inflation target.\u201d And the article reported: \u201cPrices ticked up across the eurozone this month, although they remain well short of the European Central Bank\u2019s 2 percent inflation target needed to bolster the region\u2019s economic recovery(FT,\u00a0<\/em>31 October 2015).<\/span><\/span><\/span>\u201d<\/span><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

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The Fed\u2019s 2% Inflation Fairytale\u2014\u2013Who Made It Up And What Does It Mean? Once upon a time, not too long ago, central bank wizards began telling a fairytale that economies need inflation. But not just any inflation. In their Goldilocks make-believe world, the not too hot, not too cold, just right dose of two percent […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[10484,3598,303,305,421,426,4800,1615,2096,827],"class_list":["post-14185","post","type-post","status-publish","format-standard","hentry","category-economics","tag-10484","tag-contra-corner","tag-fed","tag-federal-reserve","tag-income","tag-inflation","tag-inflation-target","tag-spending","tag-stagnation","tag-united-states"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14185","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14185"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14185\/revisions"}],"predecessor-version":[{"id":14186,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14185\/revisions\/14186"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14185"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14185"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}