Cryptocurrency: Your Enslavement Becomes Real at 0.20% per Annum

[grarpamp]

The USA was already running 90x that, still sits at 15x
that, and is laughably targeting a 10x that it will obviously
never reach again, and hasn't hit except for a week in
crash of 1986 (SGS-CPI-Alt1980), lol... Wake Up You SLAVES !


No Surprise: Wall Street Wants To Raise The Target Inflation Rate
Above 2 Percent

https://mises.org/wire/no-surprise-wall-street-wants-raise-target-inflation-rate-above-2-percent
https://mises.org/wire/after-years-stimulus-come-surging-debt-and-falling-wages

Price inflation in the United States remains stubbornly high, with
October's print at 7.7 percent. The Fed's preferred measure, so-called
core inflation is only two-tenths of a percent below 40-year highs, at
6.3 percent. Yet, it was just last year that the Federal reserve and
other "experts" were concerned that inflation wasn't high enough. In
January 2021, for example, Jerome Powell stated that the Fed wanted
price inflation to run above the "2-percent goal" because it had run
below 2 percent for too long. The 2-percent inflation target, of
course, is the arbitrary target picked by the Federal Reserve (and
many other central banks) as the "correct" inflation rate.

Now with inflation running near 40-year highs, many are wondering what
will be necessary to bring price inflation back down to the target
level. More specifically, how many hikes in the target interest rate
will be necessary, and how severe of a recession will be required?
Wall Street is especially interested in the answer to this question
because Wall Street is no longer about fundamentals. Rather, the
"market" depends overwhelmingly on how much easy money the central
bank pumps out. Naturally, the banker class wants a return to
"normal"—i.e., quantitative easing and ultralow interest rates—as soon
as possible. Moreover, Washington wants the same thing since the
political class wants low interest rates to help ease the path to ever
more government debt and higher deficits.

It's not the least bit surprising that we're already hearing calls for
the Federal Reserve to abandon the 2-percent inflation target and
instead embrace even higher perpetual inflation rates. For example,
last week Bank of America economist Ethan Harris suggested that the
2-percent target CPI inflation rate be raised. We've seen similar
urgings from both the Wall Street Journal and from think tank
economists in recent months.

The push for higher inflation rates is just the latest reminder that
wealthy bankers and other members of the ruling class aren't harmed by
price inflation the way that ordinary people are. Billionaires and
technocrats often benefit—either financially or politically—from high
price inflation. We should expect to see growing pressure from Wall
Street and Washington insiders if the Fed actually attempts to keep
any modicum of monetary tightening going into next year.

Wall Street Wants More "Flexibility" for the Central Bank

Harris's comments for Bank of America help reveal how comfortable Wall
Street is with high price inflation. Harris began by stating that
"there is nothing special about 2% other than the fact that it is the
official target in many countries." Harris is right, but his
intentions in doing so are unfortunate. Harris merely points to the
arbitrary nature of the 2-percent standard in order to call for a more
activist Federal Reserve. Harris claims "The evidence is that steady
4% inflation imposes very small additional costs compared to steady 2%
inflation. Either way the economy adapts. ...Perhaps the inflation
target should be 3 or 4%?"

The part about the market adapting is especially capricious. It seems
that for banker economists detached from real people and the real
economy, the "economy" is an abstract thing that "adapts" and there's
really no need to worry about it.

The "economy" however is not some mere idea, but is composed of actual
people. For ordinary people, it's a little more difficult to "adapt"
when one's wages are negative in real terms—as has now been the case
for months—or when the boom-bust cycle brought on by inflationary
monetary policy leads to unemployment. Middle-class pensioners whose
fixed incomes don't keep up also don't find it so easy to "adapt."

Investment bankers and billionaires with hedge funds, on the other
hand, can indeed "adapt" because they can simply take on higher and
higher levels of risk in the process of searching for yield above the
inflation rate. Sure, if things go badly, they may have to sell a
vacation home or take a hit on their stock options, but they'll hardly
have to switch to the generic mac and cheese to feed their children.

Harris isn't alone in pleading for more price inflation. Earlier this
month, Wall Street Journal writer Jon Sindreu was already on the same
bandwagon when he asked “Why must inflation be around 2%?” He went on
to claim that what really matters is not low inflation but stable
inflation. Thus, the real problems with inflation "stem from inflation
accelerating, not its being high." Thus, he asks

    what if inflation stabilizes at a higher rate—say between 4% and
6%? In this plausible case, central banks may be compelled to start
needlessly raising rates again. ... Inflation of 4% is perfectly
compatible with a healthy economy that isn’t overheating.

This came only a few weeks after the Roosevelt Institute—where New
Keynesian economist Joseph Stiglitz is head economist—called for a
higher inflation target. Specifically, the Institute wants an
inflation "range" from 2 to 3.5 percent using the PCE deflator. This
would lead in practical terms to real shift upward in target
inflation. After all, according to the PCE measure, price inflation
barely exceeded the 3.5 target even at the height of the housing
bubble in 2008. In other words, even in a red-hot bubble economy,
price inflation could still come in within the preferred range,
meaning monetary tightening would almost never be seen as necessary or
urgent.

Clearly, the trial balloons for higher target inflation are already
being floated, and once CPI inflation returns to anywhere near 4
percent, we should expect to hear howls from Wall Street and
Washington about the "need" for the Fed to once again drive down
interest rates while propping up asset prices.
How Target Inflation Keeps Moving Up

We've been down this road before. 26 years ago, the debate was over
whether or not the target inflation rate should be raised to 2
percent. Before that, Congress had put into legislation a target of
zero percent.

In the "Full Employment and Balanced Growth Act of 1978" Congress
explicitly added a "stable prices" mandate to the Federal Reserve Act,
and stated that CPI inflation should be reduced to 3 percent or less.
Moreover, by 1988, the Act imagined that the official inflation rate
should be reduced to zero:

    Upon achievement of the 3 per centum goal ... each succeeding
Economic Report shall have the goal of achieving by 1988 a rate of
inflation of zero per centum."

The drive for zero-percent inflation had advocates among some
monetarists and other "hard money"—"hard" in the relative
sense—advocates who opposed the Keynesian consensus that had produced
the runaway inflation of the 1970s. The triumph of these hawks was
short lived, however, and by the end of the 1980s, the more dovish
forces had come to the fore in the form of Alan Greenspan and
up-and-coming economists like Janet Yellen. Even Volcker had again
moved back toward easy money as can be seen in his support for the
Plaza Accord.

In his book The Case Against 2 Per Cent Inflation, economist Brendan
Brown writes:

    The Volcker Fed's abandonment of "hard money" policies and the
monetarist experiment led directly to the global monetary inflation of
the late 1980s featuring virulent asset inflation, most spectacularly
the bubble and bust in Japan. Germany was the last to abandon
monetarism formally with the launch of the euro.

    Within a few years there was the start of anew stabilization
experiment-the targeting of perpetual inflation at 2% p.a. A key
milestone was the FOMC meeting of July 1996 which considered the issue
of whether with inflation now down to below 3% the Fed should go easy
on its drive to ever-lower inflation and accept a continuing stable
low inflation around 2%. Janet Yellen presented the paper in favour.
There followed no firm resolution. Nevertheless then Chief Greenspan
agreed to a pause. A stronger commitment to a target of perpetual "low
inflation" emerged in subsequent years, both under the late Greenspan
years and more especially under Chief Bernanke.

The European Central Bank's formal embrace of a 2-percent standard was
followed informally by the Fed at first, and then formally adopted in
2012. Even that was short lived. In August 2020, the Fed announced a
switch to "average" inflation targeting of 2 percent, which meant the
Fed would sometimes target inflation above 2 percent with the goal of
2 percent over time. Now in 2022, we're talking about hiking the
target inflation rate yet again, perhaps to "between 4% and 6%" as The
Wall Street Journal suggests. Not mentioned is the fact that the
upward creep in inflation targets enabled the Fed to ignore inflation
as it relentlessly rose throughout 2021. The Fed at that point wanted
inflation well above 2-percent in order to achieve that new "average"
of 2 percent. The result was a complacent Fed that let inflation rise
to a 40-year high.

The allure of easy money never fades, especially for those who benefit
from easy money most. This latter group includes a growing army of
zombie corporations, governments mired in debt, and a financialized
Wall Street where valuations disregard fundamentals but are based on
the ability to borrow at cheap rates and capitalize on rising stock
prices. The easy-money chorus couldn't care less about small
entrepreneurs squeezed by high prices, or by old ladies on fixed
incomes. All that matters is a return to easy money, and if that means
ever higher inflation targets, so be it.