Ben Bernanke wants prices to rise 2%. There are numerous problems with such a proposal, the first being increases in money supply sometimes lead to asset bubbles and not increases in prices of consumer goods.
Indeed the Fed completely ignored (if not encouraged) the housing bubble because home prices are not in the CPI. A housing bubble and a housing crash was the result.
The second major problem with inflation targeting is prices may go up, but wages may not necessarily follow. Indeed they haven't. Let's start with a graph of 2% price inflation over time.
Inflation Targeting at 2% a Year
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for October 1st, 2014 | John Ransom
In Other News: WH Daily Intel Briefings Are Optional? Obama Attends Fewer than Half | Michael Schaus
John Ransom and the Social Security Show-- Get Your Social Security Questions Answered | John Ransom
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for September 29th, 2014 | John Ransom
In Other News: Hey White People! All GOP Policies Apparently Designed to Kill Black People | Michael Schaus