[lowkey]

Where does the Fed get the money to be a lender of last resort - by printing the money and generating inflation? If so, then how does this inflation impact the purchasing power of these last resort dollars?

I often like to take things to a logical extreme. Since the Fed can simply print all this money into existence, is there a limit to their ability to print? I mean couldn't they simply print their way out of any economic crisis or would this result in another Weimar republic situation? -- genuine question.

[tylerhou]

Printing money does not always cause inflation. The purpose of the Fed is to keep the dollar's value stable. If demand for the dollar rises, the Fed has to print money to avoid deflation.

[reedjosh]

The fed itself says we've already had 4.2% CPI the last year, and that's trusting the fed not to manipulate it's own metric.

https://www.bls.gov/cpi/latest-numbers.htm

The common mantra "When a measure becomes a target, it ceases to be a measure." applies here too, but many HN peeps seem to think it doesn't for some reason.

If you remove the constant adjustments to the CPI you get a _much_ higher rate of inflation than governments will admit.

http://www.shadowstats.com/alternate_data/inflation-charts

[tylerhou]

> 4.2% CPI the last year,

One year ago the dollar was deflating, so this is cherrypicking data. If inflation was above 4% for multiple years then that would be a problem, but a month or two is not anything to be worried about.

I'm also not sure why you think adjustments to the CPI should not be allowed. Individual goods get cheaper or more expensive relative to other goods, and consumers change their behavior. It would be asinine to have the government subsidize certain goods (via economic policy) such that all consumers purchase the same basket today as they were in 1990!