Rugoz wrote:An argument against a higher target is that inflation is generally undesirable or unpopular and comes with certain costs (though at that low level probably not quantifiable), an argument for a higher target is more effective monetary policy.
Can you show empirical data that says 3% or higher is worse than 2%, and by what measure?
Rugoz wrote:A higher baseline inflation rate has per se no effect on real interest rates and investment.
How does base line inflation not have an effect on real interest rates? Real interest rates are calculated using inflation rates. The same is true for real wages. It's wages after factoring in inflation.
The first sentence of the below link:
The real interest rate is the rate of interest an investor, saver or lender receives (or expects to receive)
after allowing for inflation.https://en.wikipedia.org/wiki/Real_interest_rateRugoz wrote:Physical cash is less than 10% of M3. With digital money, you can charge negative interest, that's the difference.
Why can't you have negative rates with physical cash?
Rugoz wrote:I don't think it's a mystery. There are explanations such as the global "saving glut".
Maybe I'm being a little bit hyperbolic here, maybe there's a cultural misunderstanding here. None the less, I stand by my description that it's a mystery (keep reading).
Yes, and that's one possible explanation out of many. Everything I've read list many possibilities, but does not definitively conclude on anything. Hence, it's still a mystery. We have ideas of what might be the cause, but we are still not 100% sure.
There are many reasons, and evidence to support all of them. It's not clear which of all the explanations is the biggest contributor, nor is it clear which of all the explanations is accurate.
So sure, it's not a total mystery, but there's still a lot of uncertainty (i.e. mystery)
I can think of 11780 reasons Trump shouldn't be president ever again.