As I said on that other thread, people like to talk about inflation as if t is one thing as opposed to a category of different phenomena. For instance, when you get a raise, that's inflation. your boss is paying more for your labor than he was last year. Maybe you're doing more work, maybe not. I take it that you inflation hawks will all turn down your next raise.
A couple of random thoughts to add:
- Central banks don't target 2 to 4 percent inflation rates because there is something magical about 4 percent inflation. What monetary policy makers tend to want is a slow steady growth in the money supply and a relatively stable price level. The reason for a growth in the money supply is that all things being equal, there will be more economic activity this year than last year. More economic activity needs more money; otherwise money becomes deflationary. Likewise, the reason that inflation targets tend to be around 2 percent is that inflation targeting is not a precise science. You target a number and chances are you'll end up under it or over it, so 1 percent inflation would be fine, but if you aim for 1 there's a chance you'll end up low and be under zero.
- It's funny to hear people talk about inflation as a tool of the rich to rob the working man. for most of our history, it's been the exact opposite. Remember William Jennings Bryant and his "cross of gold" speech? That was a populist argument against tight money. He wanted a more inflationary currency to help farmers who were perpetually in debt because they conducted all their business on credit. It was the rich who wanted strong money, because they controlled all the credit. Even as late as the 1970s people argued in favor of an inflationary environment on the ground that it benefitted the working class.
Edit: I see that Cardguy already made the first point.
A couple of random thoughts to add:
- Central banks don't target 2 to 4 percent inflation rates because there is something magical about 4 percent inflation. What monetary policy makers tend to want is a slow steady growth in the money supply and a relatively stable price level. The reason for a growth in the money supply is that all things being equal, there will be more economic activity this year than last year. More economic activity needs more money; otherwise money becomes deflationary. Likewise, the reason that inflation targets tend to be around 2 percent is that inflation targeting is not a precise science. You target a number and chances are you'll end up under it or over it, so 1 percent inflation would be fine, but if you aim for 1 there's a chance you'll end up low and be under zero.
- It's funny to hear people talk about inflation as a tool of the rich to rob the working man. for most of our history, it's been the exact opposite. Remember William Jennings Bryant and his "cross of gold" speech? That was a populist argument against tight money. He wanted a more inflationary currency to help farmers who were perpetually in debt because they conducted all their business on credit. It was the rich who wanted strong money, because they controlled all the credit. Even as late as the 1970s people argued in favor of an inflationary environment on the ground that it benefitted the working class.
Edit: I see that Cardguy already made the first point.