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by JamesBarney
2543 days ago
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This is one of the strongest arguments for a higher inflation target. Wealth concentration and an older population have driven interest rates down to the point where the natural nominal interest rate in goods time is near 0, and almost certainly sub zero for any type of recession. A higher inflation target(3-4%) gives centrals banks the much needed wiggle room to correct a recession. Unfortunately once you're in a recession it's too late to adjust the inflation rate. |
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