{"id":31133,"date":"2018-02-17T12:52:29","date_gmt":"2018-02-17T17:52:29","guid":{"rendered":"http:\/\/olduvai.ca\/?p=31133"},"modified":"2018-02-17T12:52:29","modified_gmt":"2018-02-17T17:52:29","slug":"swan-song-of-the-central-bankers-part-4-the-folly-of-2-00-inflation-targeting","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=31133","title":{"rendered":"Swan Song Of The Central Bankers, Part 4: The Folly Of 2.00% Inflation Targeting"},"content":{"rendered":"

Swan Song Of The Central Bankers, Part 4: The Folly Of 2.00% Inflation Targeting<\/a><\/h3>\n
\n

The dirty secret of Keynesian central banking is that under current circumstances\u00a0its interventions have almost no impact<\/strong> <\/em>on its famous dual mandate<\/strong>—-stable prices and full employment on main street.<\/p>\n

That’s because goods and services\u00a0inflation is a melded consequence of global central banking. The\u00a0capital, trade, financial and\u00a0exchange rate movements which result from the tug-and-haul of\u00a0worldwide central banking policies generate incessant shape-shifting impacts on the\u00a0CPI; and the ebb and flow of these forces\u00a0completely\u00a0dwarfs FOMC actions in the New York money and bond markets.<\/p>\n

In today’s world, there is no such thing as inflation in one country.<\/strong><\/em> In that regard, the traditional Fed\u00a0tool of pegging the funds rate is especially obsolete, impotent and\u00a0ritualistically mindless. After all, if\u00a0the 2.00%<\/strong> inflation target is meant as a long haul objective, it was achieved long ago.\u00a0The CPI\u00a0index for January 2018\u00a0at 249.2<\/strong><\/em> compared to a level of\u00a0169.3 <\/strong><\/em>back\u00a0in January 2000, thereby representing exactly a 2.17%<\/strong><\/em> compound annual gain over the 18 year period.<\/p>\n

So where’s the Eccles Building beef about missing its target from below<\/strong>—even if that wasn’t one of the more ludicrous notions of “failure” ever to arise from the central banking fraternity?<\/p>\n

On the other hand, if 2.00%<\/strong><\/em> is meant as a short-run target, how much more evidence do we need? Since the Fed shifted to deep pegging at or near the zero bound in December 2008, there has been no inflation rate\u00a0correlation with the funds rate whatsoever.<\/p>\n

<\/p>\n

In the sections below\u00a0we will resolve the inflation\u00a0matter once and for all\u00a0by demonstrating that the very idea of 2.00%<\/strong><\/em> inflation targeting\u00a0(or any other target) is singularly stupid and\u00a0destructive.<\/p>\n<\/div>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Swan Song Of The Central Bankers, Part 4: The Folly Of 2.00% Inflation Targeting The dirty secret of Keynesian central banking is that under current circumstances\u00a0its interventions have almost no impact on its famous dual mandate—-stable prices and full employment on main street. That’s because goods and services\u00a0inflation is a melded consequence of global central […]<\/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":[3832,124,5979,172,2120,303,426,467,6841,3650],"class_list":["post-31133","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-bankers","tag-central-banks","tag-contracorner","tag-cpi","tag-david-stockman","tag-fed","tag-inflation","tag-keynesian-economics","tag-keynesianism","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31133","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=31133"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31133\/revisions"}],"predecessor-version":[{"id":31134,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31133\/revisions\/31134"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=31133"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=31133"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=31133"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}