The Missing 7%

clipped from blog.mises.org Heavyweights Kohn,Volcker Spar Over Inflation Goal notes that: Federal Reserve Vice Chairman Donald Kohn's question-and-answer session at a Vanderbilt University conference Saturday was going as countless others surely have in his years as a top policy maker. ... Until Paul Volcker raised his hand." Former Fed Chairman Volcker ... questioned how the Fed can talk about both 2% inflation and price stability. ... In the minutes of its January policy meeting, the Fed said ... 2% inflation would be ... price stability. "I don't get it," Volcker said ... By setting 2% as an inflation objective, the Fed is "telling people in a generation they're going to be losing half their purchasing power," Volcker said. A friend observed that at least Volcker deserves credit here for somewhat favoring low inflation. I disagree. What the mainstreamers fail to realize is that even zero percent "targeted" (price) inflation is horrible. In other words, a 2% (price) inflation is thus really like 7%.