Inflation Targeting—A Fatally Defective Policy Not Fit For Purpose

The battleship admirals’ award of the present era surely goes to the denizens of the Eccles Building. They insist there is no trace of the 1970s type inflation afoot—-so they keep on pumping-money at an hellacious pace in pursuit of their ritualistic inflation and maximum employment “goals”.

But the roaring 1970s inflation was about soaring commodity, industrial and consumer prices, while this one is an altogether different beast. Due to structural change in the global economy (hint: the Red Ponzi and its low cost supply chains), today’s monetary inflation manifested itself first in booming financial asset prices and is now only secondarily and belatedly seeping into the goods and services price indices.