Of course, only one is the real thing. It’s like the difference between rising prices and inflation. There is only one that is monetary disequilibrium, and the other, not so much.
I am pretty sure I don’t have to spell out what a road apple is. You all know what it is and that it is nothing like the other kinds of apples. The difference between a general rise in prices from monetary disequilibrium and a rise in prices from a supply shock isn’t quite as discernible, however, and easily confused. We wouldn’t eat a road apple, but would gladly sink our teeth into a Gala. But we cry foul in a supply shock and point at the Fed, which is kind of like eating a road apple because it bears the same sir name – and if there were any bubbles in the last decade, or if there are any “forming” now, it would have to have been and is in road apples.
When we eat road apples during a supply shock, we are really asking the Fed to feed us more by the shovel-full and then force feed them once we’ve decided that it smells really bad. Because what happens is that the Fed adjusts all prices downward to achieve some arbitrary price goal – inclusive of the road apple bubble – I mean supply shock prices. And that causes all prices and wages to adjust, filling the streets with unemployed and many, even those who haven’t lost a job, feel like we’re wading through the largest pile of road apples ever. Road apple is everywhere. In the newspapers, on the TV, on the internet, experts are saying our problems won’t be solved until we’ve eaten every last bite of road apple the Fed dishes out – even that our grandkids will be eating the road apples from the 20-teens.
How about we stop the inflation targeting, price stability manure? I am more than ready. I don’t want prices stabilized in aggregate. It makes us as well off as we’d be if we really were fed a steady diet of road apples instead of Galas. And please, do it now. I don’t want to have to start talking about Crabs!