What is roughly constant?
The Fed’s inflation target is now 2% ( below the 3% average)
I’d go for the 2% (or even 5%) target iff food, (pre-tax) energy, and housing purchase prices were included. Basically returning to the saner pre-1980-or-so inflation metric.
Basically discourage speculative investment in necessities and maintain a feedback mechanism to prevent bubbles in same. Make energy adjustment pre-tax to allow for taxation of fossil fuels to fund investment in cleaner sources.
If you want to be a landlord, OK. If you want to horde real-estate and flip it, screw you. If you want to be a farmer, chef, or grocer, OK. If you want to trade in food futures, screw you. Same goes for energy.
It’s bizarre to exclude things that are CRITICAL from inflation metrics while leaving the fluff in there. If you want to create bubbles, create them in areas where the US is actually LACKING, like clean energy, infrastructure investment, etc.
Not in areas where we’re glutted, like housing or social network stocks :)[/quote]
Bingo. I’d even argue that there should be no inflation target. The Fed should be more concerned about maintaining a stable dollar/stable purchasing power.
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FIH,
A falling dollar is a capitalist’s dream. They benefit from the asset price speculation that results from massive money printing. It’s the people on fixed incomes, including workers, who suffer from a declining dollar. The raises they get (if any) have not been keeping up with real inflation — the kind of inflation that spdrun is talking about.
Money printing encourages speculation, not necessarily productive investing. Needs and markets (the desire for profits) will ensure that people are investing in new productive investments.
