Is inflation simply a function of psychology? I hear Jpow talking about trying to anchor inflation expectations and all I hear is we are trying to manipulate people to do what we want them to do.
Discussion
In my opinion that is absolutely not the case. It's just math. As soon as the money supply increases, individual monetary units lose value. Because the value of individual monetary units is tied to the total stock of money.
I hear you and appreciate your point of view, but why all the the talk of trying to manage inflation expectations? Seems like there has to be some sort of psychological component to it. I dunno just a thought
In the short term, that is definitely the case. But on the whole, I think what Powell said is utter nonsense, comparable to church people who believed that the earth was at the center of the known universe.
Great analogy!! 😂😂 so true!
Indeed it does have a psychological aspect. Notice when Jpowel gets asked questions like why do we need the target of 2% inflation he has trouble giving an answer that sounds grounded in logic. His responses always feel flimsy.
That’s what I picked up on. He was speaking gibberish trying to sound smart and sophisticated. It didn’t work.
I’m no Chairman of the Federal Reserve but even I know that’s not gonna work.