“A rising chorus is urging the Fed to move its goal posts in the war on inflation – lifting its inflation target to three percent from the current two. How high might the Fed go? Morgan Stanley’s chief, James Gorman, thinks four percent inflation would make for a “happy land,” the Financial Times reports. The FT’s own Gillian Tett suggeststhat on inflation ‘four is the new two.’ Yet how did we get to the point where even two percent inflation is considered acceptable?”
USAGOLD note: This editorial goes on to quote Interest Rate Observer’s James Grant as saying the road to another 2008-style disaster is institutionalizing high inflation on the order of four percent. As one observer recently pointed out moving the target higher does not mean it will become the ceiling and that is where the slippery slope comes into play. Inflation targets aside, what it really gets down to is how much money we are printing and where it is ending up. As it is often said, once the inflation genie is out of the bottle, it is difficult to get it back in.