Inflation is the cruelest tax.
The Federal Reserve is tasked with a balancing act. They are supposed to have “some” inflation, but not “too much” inflation. Somewhere around 2% seems to be the consensus (footnote 1). Below is a graph of inflation. The largest drivers of this metric are listed. Wasn’t Obamacare supposed to bend the medical care cost curve downward? I seem to remember our illustrious President promising that to us. Nota bene. There is a bump in 2009. let’s try to remember who became president in 2009.
When the Federal Reserve is buying up trillions of dollars in debt, it is nearly the same as printing trillions of dollars (footnote 2). That is a recipe for hyperinflation (you really should read this post). That would be “bad” in the whole “good/bad” thing.
And thanks to PK for sending this to me.
Footnote 1: The Fed’s policy committee, the Federal Open Market Committee (FOMC), does not have an explicit inflation target but regularly announced a desired target range for inflation (usually between 1.7% and 2%) measured by the personal consumption expenditures price index.
Footnote 2: The graph below describes the Fed policy to buy federal debt:
Once again, do you remember what happened in 2009?