The Inflation Rate Is Too Damn Low

The Federal Reserve is worried about inflation:

Fifteen years ago, Japan found itself stuck with a problem: sinking inflation, interest rates near zero and a limited ability to generate higher prices. Five years ago, Europe faced the same challenge.

The worry haunting Federal Reserve officials is that they will be caught in a similar trap within the next decade. This concern is animating their yearlong review taking center stage with a two-day research conference beginning Tuesday in Chicago….“We’re trying to think of ways of making that inflation 2% target highly credible, so that inflation averages around 2%, rather than only averaging 2% in good times and then averaging way less than that in bad times,” Fed Chairman Jerome Powell said in February.

The fact that the Fed is “trying to think” of ways to increase inflation confirms what I’ve long thought: they don’t know how to do it. Neither did Japan’s central bank. Or Europe’s.

In theory, central banks are supposed to have absolute control over inflation. And in theory, maybe they do: flood the country with enough money for long enough and eventually inflation will rise. But the amount it takes in the face of a fundamentally deflationary economy is apparently so enormous that in practice it’s not always possible.

Most likely this has something to do with the aging of the population. Japan got there first, Europe got there next, and we’re inching in that direction too. What’s the answer to that?

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Truth #1: The chaos is the point.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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