Where we are right now is an unhealthy stasis with inflation well above 2%. And low unemployment due to a disabled workforce.
All they are doing is delaying the inevitable. If inflation is to go down anywhere near 2%, then the Fed has the raise rates.
https://www.nytimes.com/2014/12/21/upshot/of-kiwis-and-curre...
https://www.nytimes.com/2023/03/24/business/inflation-federa...
https://fivethirtyeight.com/features/why-the-feds-want-2-per...
https://seekingalpha.com/article/4531829-older-workers-propp...
> And high unemployment due to a disabled workforce
Wut? Please prove this assertion wrt the use of the word "high." [1] That's arguably a call for stronger social safety nets [2], not more disabled employment. At least a lot of these folks are able to be on Medicare ("Half of all persons with a disability were age 65 and over, nearly three times larger than the share for those with no disability.") and Social Security.
I agree that 2% is too low, but the only way to credibly change the number is prove they take the number seriously by getting back down to 2% before they increase it.
Inflation only serves to create profit for industry. The only inflation target I propose is 0%.
Just think about it, why don’t they consider a 0% inflation a stable economy? And why is 0% inflation a bad thing?
Low inflation is good for savers, but they'd rather have people invest money than sit on it. Inflation is a punishment for people who take their money out of the system.
The Fed aims for a gentle inflation to nudge people into buying stuff now rather than putting it off until tomorrow. The 2% figure is, very roughly, the amount of inflation that matches the expected systemic unemployment under Okun's Law. ("Laws" in economics are, of course, much less solid than they are in physics, but it does mean there's a model behind it and not just a guess.)
I would say, that’s a good thing actually, considering the state of the climate.
We've managed to subvert those limits in the past. Technologically, we could do that with climate change as well, though socially and politically that's much less feasible. That could well mean that we reach the limits of exponential growth sooner rather than later.
That raises an awful lot of questions that traditional economics is not prepared to answer. And a lot of people aren't going to like the answers.
Now would be a fabulous time to make that switch, since now is one of the few times where this shift in policy wouldn't result in a switch in practice.
Sorry, that meant to say “high employment due to a disabled workforce”. Text to speech error.
I don’t know opinion about the 2% rate, it’s just wet the Fed names for. They’ve said it over and over again that that’s the goal. And you can say it’s made up butt inflation at 4% is unsustainable when wages aren’t rising at the same rate. And when wages do you start to rise?
When workers organize and unionize, which they are not doing fast enough (imho) considering the leverage available to them (due to structural demographics previously mentioned).
That’s my point when inflation, rises and ploy is unionized, and we just go up. And then wages go up there’s less profit for the company so either there’s an economic downturn or there’s inflation again. So the people who control the economy are trying to balance this level between corporate profit and work or revolt. And that has been the so-called 2% sweet spot.