3% Inflation Target Looks Like A Done Deal \ stacker news ~econ

3% Inflation Target Looks Like A Done Deal

6985 sats \ 18 comments \ @siggy47 5 Apr econ

This morning I woke up to this article on CNBC: https://www.cnbc.com/2024/04/05/el-erian-says-the-fed-has-turned-into-a-play-by-play-commentator.html

Mohamed El-Erian is the ultimate insider, and he's openly criticizing the fed for being "too tight", and suggesting that a 3% inflation target makes sense.

“The way you discuss it politely is you don’t say ‘let’s change the inflation target,’ you say ‘let’s get to 2% somewhere in the future. Let’s have a trajectory’,” El-Erian said. “It may well prove that the economy is stable nearer to 3%. I don’t think that’s going to de-anchor inflation expectations,” he added.

I have been following this guy for years. He is very influential. He's a former IMF bigwig, and was considered a serious choice to be Egypt's next president.

I don't see how guys like him expect to see the dollar survive as reserve currency, but I have to think they have a plan.

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395 sats \ 5 replies \ @td 5 Apr

Have still never heard a good explanation as to why it's 2% at all

135 sats \ 2 replies \ @siggy47 OP 5 Apr

Good point. No doubt these mainstream Keynesian economists think some inflation is good, and they're all terrified of the evil deflation bogeyman, which would amplify government debt.

75 sats \ 1 reply \ @BenAllenG 5 Apr

if deflation so bad why don't we stay as far away from it as possible?? 2% is too close for my comfort, lets get to like 50%, much less likely to have deflation from there.

110 sats \ 0 replies \ @siggy47 OP 5 Apr

I think they hear you and agree. They're just working up to it.

7 sats \ 0 replies \ @030a29f333 5 Apr

2% is low enough where people dont really realize they're being stolen from.

If someone came and took 5% of the stuff in your home, you may suspect something was up. At 10% you'd know. At 20% you'd be pissed. But at 2%, you probably never notice at all.

0 sats \ 0 replies \ @Diego 5 Apr

It’s made up. New Zealand banker/economist decades ago mentioned getting inflation to 2% and it stuck. I haven’t seen anything other concrete reason apart from it’s not low not too high.

447 sats \ 0 replies \ @Undisciplined 5 Apr

I predicted this a while ago. Getting back to 2% means politically unpalatable choices, so just change the inflation target.

228 sats \ 1 reply \ @quark 5 Apr

They can't do that. They would lose the very little trust they have left. However they have insisted many times that they won't change the target. So that ultimately means they will change it. Like the oh inflation is just transitory and so on.

10 sats \ 0 replies \ @siggy47 OP 5 Apr

It's a strange environment. Yesterday the fed presidents were all singing the same tune-rate cuts may not be coming. At the same time, this guy is quoted this morning:

Goldman Sachs Chief Economist Jan Hatzius said he still expects three interest rate cuts from the Federal Reserve this year.

148 sats \ 0 replies \ @elvismercury 5 Apr

I don't see how guys like him expect to see the dollar survive as reserve currency, but I have to think they have a plan.

If you haven't yet cottoned onto btc, presumably you see it as the best of every other terrible option? That's what I'd think if I hadn't. Dollar milkshake.

75 sats \ 0 replies \ @DesertDave 5 Apr

2% 3% whatever. It's just numbers to play pretend.

75 sats \ 0 replies \ @BitcoinIsTheFuture 5 Apr

Yup. Turns out 9 to 3% is easy when. You fudge the numbers. Getting lower not so much, lol

75 sats \ 0 replies \ @030a29f333 5 Apr

The goalpost shifting on target inflation has just begun. It's a runaway train now and will only get more insane. Welcome to the death spiral!

10 sats \ 0 replies \ @riberet19 5 Apr

This has been talked about since the spike in inflation in 2021, which is what central banks would end up proposing, for being unable to bring inflation back to 3%, this only shows that the system is fractured, how long will it take to see that they raise the target to 4%?

0 sats \ 0 replies \ @jeff 6 Apr

3%?

Why not 2.7%?

Why not 3.14159%?

Why not f(x, y, z) • 3%?

Why not 3¡%?

?¿?¿?¿?¿?

0 sats \ 0 replies \ @siggy47 OP 5 Apr

Look at this article: https://www.cnbc.com/2024/04/05/fed-governor-bowman-says-additional-rate-hike-could-be-needed-if-inflation-stays-high.html

They are all over the map. I give her credit, but they'll run over her like a speed bump.

0 sats \ 0 replies \ @kr 5 Apr

the goalposts are on the move!

0 sats \ 0 replies \ @Coinsreporter 5 Apr

Yes, they have plans but they don't have sustainable or everlasting plans. Their plans can save them the anguish in short term but their last is only Bitcoin.