by The 2 per cent central bank fetich The 1990s had witnessed the widespread adoption of official inflation targets by central banks … Not only did the major central banks in the developed world now have a target, but they all coalesced around the same number: 2 per cent acquired talismanic significanc … After 2008, central bankers’ pursuit of inflation targets became as obsessive as their fear of deflation. “The ultimate and the only mandate that we have to comply with is to bring inflation back to a level that is close to but below 2 per cent,” stated the President of the European Central Bank, Mario Draghi, in October 2014 … The pursuit of inflation targets resembled a massive real-time Milgram experiment, with the world’s citizenry as guinea pigs.
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Lars Pålsson Syll considers the following as important: Economics
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The 2 per cent central bank fetich
The 1990s had witnessed the widespread adoption of official inflation targets by central banks … Not only did the major central banks in the developed world now have a target, but they all coalesced around the same number: 2 per cent acquired talismanic significanc …
After 2008, central bankers’ pursuit of inflation targets became as obsessive as their fear of deflation. “The ultimate and the only mandate that we have to comply with is to bring inflation back to a level that is close to but below 2 per cent,” stated the President of the European Central Bank, Mario Draghi, in October 2014 …
The pursuit of inflation targets resembled a massive real-time Milgram experiment, with the world’s citizenry as guinea pigs. Obsessed with their targets, technocrat central bankers were blinded to, or at least encouraged to downplay, any adverse results of their policies. Asked whether the ECBS actions were causing inequality, Draghi replied that his concern was with the target …
Through thick and thin, central bankers would cling to the sacrosanct target. Their credibility depended on it. Never mind that the policies called forth by inflation targeting appeared to be killing economic growth. Never mind that zero interest rates discouraged savings and investment, and impaired productivity growth. Never mind that ultra-low rates, by keeping zombie companies on life-support, resulted in the survival of the least fit. Never mind that central bank policies contributed to rising inequality, undermined financial stability, encouraged ‘hot money’ capital flows and fostered numerous asset price bubbles, from luxury apartments to cryptocurrencies.