If you are old enough to remember how economic life was for you in the latter half of the 1980’s or 1990’s, which set of conditions would rather be living in now those from 1985-88, or 1995-98 or 2020-24?
According to some macro blogs I read, the ambiance is that any inflation report over 2% is the fall of mankind, or at least the economics profession. But I suppose that it might be an interesting investigation to check the historical core PCE inflation rates and compare each of these 4-year periods. Then, I will use my gray matter and make up my own mind about what it means to me.
Full disclosure, my opinion of the inflation targeting concept in general is very low. Inflation targeting is the least bad option if I were to assume a match-up in which a gold standard is the only competitor. Oh, yeah. In that match up, it shines like the gleaming city on the hill. No humanitarian crisis there. Well, perhaps, that’s not quite right. But I am trying to be charitable.
The basic point is that the policy is a straitjacket to growth because NGDP growth must be depressed, have a roof on it to keep arbitrary and poorly defined measure(s) in the movement of prices stable, regardless of what’s impacting those prices. It is, de facto, reasoning from a PAST price change codified into public policy, that everyone must worship and provide sacrifice for, large or small, whether they know it or not. For no clear and convincing reason. There’s a ton of ruin in a nation, and inflation targeting is just latest version of ruin.
Talk about inflation this and inflation that, and inflation targeting on steroids can and nearly did lead to the fall of mankind and certainly the economics profession which didn’t learn the right lesson, back in 2008/9. So, without even looking up the PCE numbers for those sample eras, I can say that I probably will not be shocked by what I find (although, I did cheat just a little. I posted about average inflation for late 1980’s years ago). My guess is that we are all better off, even right now than we were 10 years ago because the whole inflation targeting gaslighting works on the premise that you just can’t miss what you will never have; and if you notice because you lost something under tightening monetary conditions, like your career, income, family and home, the retort is always the same. You just shouldn’t have had that in the first place, sister. It was fake to begin with and – The party is over!
The economics profession needs to put inflation targeting and all its associated lore and gaslighting to bed. Anything less is completely irresponsible.
dajeeps 