Quote:
Originally Posted by eribrav
Core inflation is only very low if you accept the figures the US govt. puts out there.
Most of us have a need to eat and consume fuel, and don't get to make the kind of hedonic adjustments the govt. is so fond of making to artificially depress the figures.
Another one for Ralphie: Where can you safely invest money nowadays and earn any kind of interest rate return? Ponder that. The reason there's no answer for that question is the zero interest rate policy. It takes folks who need a rate of return on their savings to live on and either forces them to accept nothing, or forces them onto the risk curve in search of returns, in a place they shouldn't be investment-wise.
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Core inflation excludes food and oil because they are volatile and not really influenced by monetary policy. But one need not accept it. The fact that long term interest on US bonds is still low means that investors themselves don't expect much higher inflation.
And "zero interest" by the government doesn't, by itself, reduce the amount of money investors can make. It only reduces returns on financial, as opposed to direct, investment. And the only reason it does so is because private actors would rather lend to the government at 0% than to someone else for more than that. That is the only reason the interest rates get that low. If there was any sort of actual concern about the government inflating things or being unable to repay its debt, the interest wouldn't be that low. In fact, interest rates for many private companies and individuals remains high, meaning that investors can still invest and expect some kind of return.