by Charles Hugh Smith
Of Two Minds
Central banks seeking to boost inflation are waging financial war on the bottom 95% of households.
Central banks are obsessed with boosting inflation, but the “why inflation is good” arguments make no sense for households being ravaged by inflation. The basic argument is that inflation makes it easier for debtors to service their debts.
But this is only true if income rises along with costs. If income stays flat while costs rise, households lose ground–debt remains a burden as the purchasing power of income plummets.
Central banks and the mainstream media make two fatal errors when discussing inflation.
1. They assume an inflation rate that lumps all costs/prices into one number is meaningful. But the “headline” consumer price index (CPI) is meaningless for two reasons: