Temporary or not, inflation is rattling restaurants and broader economy

Would you be willing to say the same about climate science?

From a statistics perspective 2021 is an extremely noisy year. Even if you think that economists have the perfect answer given sufficient data they still would have to wait for the data to clear up. If the noise is gone it is entirely possible that we still have inflation but we just happen to hit exactly 2% inflation in 2022. If inflation were to undershoot the 2% target then you would have to do the unconventional monetary policy racket again. If inflation is too high, congratulations we can have normal interest rates again!

Bonus episode:

Money is created through debt. Money can be taken hostage, by taking it out of circulation aka saving it. However, that money is needed to pay the debt back. There is a due date for debt repayments and this is where the problems start: There is no due date for deposits to be spent and thus returned to the borrower...

From a purely logical perspective default is inevitable given the above conditions and it requires the destruction of the deposits and thus the confiscation of the deposits. How does this happen in practice? Inflation, negative interest rates, wealth taxes or bank bankruptcy resulting in the loss of deposits. Maybe expiring CBDC offer a fifth option by forcing spending directly. You are of course allowed to spend your money on gold or stocks.

Sure, I was more just using those as colorful analogy to make the possibility easier to understand.

I agree with you that it’s difficult to predict whether inflation will or won’t be transitory and I suspect that if you got Powell to speak honestly about the issue he’d tell you that his confidence in his projection is closer to 2/3 than 99/100.

He does have a lot of quite powerful tools that make it easier for him to be correct, such as expanding the money supply by an unlimited amount and defining the inflation metric.