Any thoughts about the pre- Ukraine war intention of the Fed to inflate away pandemic period monetary stimulus by keeping inflation relatively high at ~5%?
Yes, tbh I think it’s there, maybe not 5% but certainly above 3%. USD strength and just the overall idea of maintaining USD supremacy as petro-Yuan gets pushed by China requires a better grip on debt to GDP ratios. It may never be explicitly said by the Fed but they have a viable out here if they want inflation a bit higher. Also probably helps to have rates higher a it could better erode those “unfunded liabilities” when you discount it.
Another thing that is increasing is the cost of money. It may drain liquidity in the long term, but in the short term it is a very basic source of inflation.
Any thoughts about the pre- Ukraine war intention of the Fed to inflate away pandemic period monetary stimulus by keeping inflation relatively high at ~5%?
Yes, tbh I think it’s there, maybe not 5% but certainly above 3%. USD strength and just the overall idea of maintaining USD supremacy as petro-Yuan gets pushed by China requires a better grip on debt to GDP ratios. It may never be explicitly said by the Fed but they have a viable out here if they want inflation a bit higher. Also probably helps to have rates higher a it could better erode those “unfunded liabilities” when you discount it.
Another thing that is increasing is the cost of money. It may drain liquidity in the long term, but in the short term it is a very basic source of inflation.