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by SubjectToChange
815 days ago
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Lets assume the FED makes 0% inflation a policy objective. As the US and the rest of the developed world continues to age, more and more retirees are supported by fewer and fewer working people. In other words a massive portion of the population is spending money, and soaking up resources, while producing nothing. Obviously this is profoundly inflationary but to maintain 0% inflation, the productive members of society will have to work a great deal more and endure policies which are explicitly designed to artificially suppress the value of their labor. |
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The people who presented as arguing for 0% inflation are actually more often arguing for a lack of inflation targeting at all, and an end to the practice of creating money. In other words they argue for 100% reserve banking and abolition of the legal right of the central bank to issue new money.
In such a system prices might go up or down, depending on whether the underlying economy is doing better or worse, and governments would simply ignore it. In the case of demographic decline that would mean prices do indeed go up and that would correctly reflect the fact that resources have become scarcer.