We all knew this was coming, but it's still a bit infuriating to see in the wild. The attempts to begin normalizing higher perpetual inflation have begun in earnest. Yesterday morning Jason Furman, an economist from Harvard, wrote an op-ed in the Wall Street Journal in which he made the case that the Fed should adjust its inflation target from 2% to 3% beginning in 2025 in an attempt to "give the Fed more scope to cut interest rates and thereby stimulate the economy" in the future. This is a great peek into the inner-workings of Fed policy and how it is slowly manufactured over time.

You see, the Fed can't come right out and say that it is raising its inflation target from 2% to 3%. It would be too politically charged to tell consumers that they independently came to the decision to raise their target rate. The idea cannot come directly from the Fed. It must first be seeded by the academic economists who write columns in respected papers like the Wall Street Journal and the New York Times. The Furmans and Krugmans of the world run cover for the Fed by getting the idea into the public consciousness. From there, the idea becomes more approachable by Fed officials and they can begin to move their goalposts in a methodical manner during FOMC meetings and press conferences where the language will begin to change ever so slightly over time.

The reality of the situation is the Fed needs to raise its inflation target because the credit system demands it. The only way out is default via debasement. Consumers be damned. It's a great shame that the Fed and the Treasury have been backed into the corner that they're in because the consequences of increasing the inflation target from 2% to 3% (a 50% increase in the target) is a deleterious effect on the purchasing power of the dollar over the long run. With 2% inflation it takes about 33 years for a dollar to lose half its purchasing power. With 3% that timeline drops to 23 years. Making the rat race significantly more stressful for your average consumer.

All of this should be a reminder that one of the Fed's mandates is "price stability" and that their idea of price stability is a perpetually low (soon to be not as low) level of price inflation. This is pure Orwellian double speak. Price stability, if taken literally, means prices remain relatively stable over time. They shouldn't double over the course of 23 years if they are stable. Price fluctuations under a sane monetary system would be driven purely by demand and supply dynamics determined by the amount of raw materials available to producers and the demand for goods and services by consumers at any given point in time. Artificially manipulating the supply of money shouldn't be a factor in the equation. Yet, in the clown world that has been normalized over the course of decades, it is the norm. This is "just the way it works". Well, it shouldn't work this way and it doesn't have to work this way now that bitcoin has joined the party to provide the market with a monetary good that makes it impossible to manipulate the money supply.

Final thought...

Getting your laptop back after working from an iPad for two weeks feels like a super power.