by Michael Lebowitz and Jack Scott
Real Investment Advice
One of the Fed’s congressionally charted objectives is to promote stable prices for the goods and services we all purchase. Investors have been lulled to sleep for over 20 years by “price stability.” As a result, few investors have an appreciation for how inflation can impact their investments.
Despite stable price increases for the last two decades, the Fed now wants more inflation.
Given the negative impact inflation has on our wealth, why does the Fed wish to boost inflation? Maybe more important, how can they generate inflation?
Before progressing, we explain the hypocrisy between the Fed’s 2% inflation target and true price stability. For this, we lean on David Rosenberg quoting Alan Greenspan: “When asked at the July ’96 FOMC meeting the level of inflation that truly reflects price stability, he said, “I would say the number is zero, if inflation is properly measured.”