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Inflation as Fed's target is a scam
Let me give an extreme example. A pizza is priced at $10 two years ago. One year later, it is priced at $1000. The yoy inflation is ~10000%. Another year later, the price drops to $990. The yoy inflation is -1%.
According to Fed, it is a total victory. Inflation is under control. Everything is back to normal, nothing to worry about.
But is it really? Can you now afford $990 pizza just because inflation is negative.
By Fed's prediction that inflation rate goes back to 2% in 2025. Lets assume they can succeed (many doubt), everything will be >40% more expensive than pre-pandemic. Is our wage increased by that much? And we have to cheer what a successful job the Fed has done. $SPDR S&P 500 ETF (SPY.US)$ $Invesco QQQ Trust (QQQ.US)$ $S&P 500 Index (.SPX.US)$ $Nasdaq Composite Index (.IXIC.US)$ $Dow Jones Industrial Average (.DJI.US)$ $ProShares UltraPro Short QQQ ETF (SQQQ.US)$
According to Fed, it is a total victory. Inflation is under control. Everything is back to normal, nothing to worry about.
But is it really? Can you now afford $990 pizza just because inflation is negative.
By Fed's prediction that inflation rate goes back to 2% in 2025. Lets assume they can succeed (many doubt), everything will be >40% more expensive than pre-pandemic. Is our wage increased by that much? And we have to cheer what a successful job the Fed has done. $SPDR S&P 500 ETF (SPY.US)$ $Invesco QQQ Trust (QQQ.US)$ $S&P 500 Index (.SPX.US)$ $Nasdaq Composite Index (.IXIC.US)$ $Dow Jones Industrial Average (.DJI.US)$ $ProShares UltraPro Short QQQ ETF (SQQQ.US)$
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101785677 : now then you know? people still cheering 5% yoy because it is “lower” than last month.
Make it Big : I understand your point. There should be a base year. However, I think economists also assumed that the spending power should have increased to afford the $1000 pizza over the time period because of the excessive quantitative easing policies. ie excessive money printing that leads to inflation. The problem is I am unable to get a good share of the increased money supply to afford the pizza. Those who can, will see the $1000 pizza as the new norm.