Oddbean

I was doing some deep reading about this today. Forget money printing etc for one moment and my conclusion is that inflation in its most basic form is a result of human behaviour and basic supply and demand. It exists within simple trade, be-it two sheep for your donkey etc. If humans demand more donkeys or more sheep then inflation happens. However, it gets far more intricate when fiat money supply is involved.

They believe that if we have deflation, people will simply hoard money instead of investing in real things that benefit people. They might be right. https://image.nostr.build/c6395335eb4e1a6f0a6eed9c2b2ef0872f9dfa684d5dfe46b40859591f01b390.jpg

Yeah that was Keynes’ reasoning. But no central banker ever says why specifically 2% inflation is the target. Why not 0.1% if they’re such amazing economic managers that they can control the economy via interest rates? Why not 5% if they want to claim that inflation stimulates growth? 2% is arbitrary and they don’t ever want to talk about the arbitrariness of it because they have literally no answers. They just throw it out there as if it’s centuries old accepted wisdom when in fact it is completely baseless.

Things like housing will drop to their utility value, eg become affordable. People will stop spending money on shit they don't need. Basically they spent money to stimulate economy, but added a claw back feature. Maybe people were spending it , as they had shit they needed.. Why on earth should I believe "this" bit of text..