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IPFS News Link • Economy - Economics USA

The Inflation Targeting Scam And Why It Guarantees The Mother Of Financial Meltdowns

• https://www.lewrockwell.com, By David Stockman

A fundamental problem with an explicit inflation target is the difficulty of knowing if it has been hit.

That problem is plainly evident in the chart below. You could very easily make the argument that goods prices are beyond the Fed's reach because they are set in the world markets and by the marginal cost of labor in China and the EM.

Therefore the more domestically driven CPI index for services such as housing, medical care, education, transportation, recreation etc. is the most relevant yardstick. Alas, if there is something magic about 2.00%, why then, mission accomplished!

On a five-year basis, services inflation is up at 2.2% annually, and during the past year, it has heated up to 3.2%.


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