[WalterBright]

One of the more astonishing pieces of propaganda coming from the Fed is the idea that 2% inflation is some sort of "good for the economy" thing. Astonishing in that people buy it hook, line and sinker.

What it is is a 2% annual tax on the economy. Even worse, your illusory inflation "gains" on assets then get taxed, too.

The only thing it is good for is the politicians.

[Straw]

Although I agree wholeheartedly with the economic logic, I have a couple of minor counterpoints:

1. Constant 2% inflation at least doesn't have the negative effects of unpredictable inflation, its just a 2% tax.

2. Certain prices appear to be slightly sticky in that they don't go down, for example, wages are almost never cut in nominal terms, for psychological/cultural reasons- people tend to quit if their wages get cut. Slight inflation allows these to slowly decrease without running into the asymmetric price stickiness behavior.

What do you think?

[WalterBright]

I'm actually ok with a 2% inflation rate as a means of funding the government. I just wish the Fed and the government would be honest about it. I don't like losing all respect for the officials pushing the propaganda.