Fed's 2% Inflation Goal Is A 'Con Job'

by JASmius




Try this thought experiment: You're a socialist, and you want to put over the falsehood to the public that you want to encourage economic growth, but you don't want it to come from the private sector and its "greedy" businesses, but from the pristine, morally pure auspices of the righteous public sector.  How would you phrase that scam pitch?


Answer: You would say, as the "Old" Yellen Federal Reserve keeps squawking, that "we need more inflation".  And one man, at least, is calling it the BS it is:

The Federal Reserve mantra that inflation needs to be higher is a "con job" — more inflation just means more declines in Americans' already depleted purchasing power, according to Reagan White House budget chief David Stockman.

In his Contra Corner blog, Stockman said that even after the Fed has missed its 2% inflation goal for twenty-eight straight months, consumers' savings and paychecks have still lost 3.3% of their value during that time. 

"How could it be better if inflation had been higher and consumer wallets had shrunk even more?", Stockman asks.

"Indeed, the very idea that the hard-pressed main street consumers of America — most of whom have virtually no discretionary income to spend after the basics anyway — will go on a buyer's strike if they don't get enough inflation is just plain ludicrous," he wrote.

Stockman and Yellen are talking right past each other.  They're addressing two entirely different things.  The former is speaking monetarily; about currency valuation and purchasing power and what American consumers can afford with whatever meager funds they have left on an ongoing basis in this engineered permanent economic depression.  Given that household incomes continue to steadily erode under Barack Obama, why in the blue hell do we need the value of that reduced income to evaporate as well?

But the Fed is speaking Keynesianly; remember, to the socialist there's no such thing as a "supply side," because the "supply side" is inherently evil and must be eradicated.  There is only the "demand side," how the public can be programmed to "spend, spend, spend!".  Typically this is done by emulating their government by living beyond their means and incurring ever-mounting piles of debt, and flooding the economy with fiat money that creates the illusion of "prosperity" even though it's actually worth little or nothing.  Which, since all those greenbacks are chasing a stagnant or shrinking pool of goods and services, means escalating price inflation.

The term coined for this phenomenon forty years ago was "stagflation".  What David Stockman is saying is, in essence, "The 1970s just called, and they'd like their economic policy back."

Which is why the Fed's printing presses churn furiously on, and why warp speed isn't good enough to get the "Obama boom" to "official" 2% inflation (Been grocery shopping lately or gotten monthly bills out of the mail box?  Real inflation is more than a wee bit higher than 2%, methinks) - they need quantum slipstream capability.  All in the service of keeping that Wall Street bubble from collapsing, tearing off the fraud of the chimeric "recovery," and exposing the Second Great Depression over which Barack Hoover Obama has been imperiously presiding all along.

But, as the Proverb says, "There is a time and a place for everything".  When it's time for that bubble to pop and gift Barack Obama with the Final Crisis he needs to seal the Fundamental Transformation deal, "2% inflation" will, shall we say, rapidly cease to be a top Regime priority.