So recently Barry Sternlich took to @SquawkCNBC and discussed why Fed should give up the 2% inflation expectation and settle with 3% to 4%.
Here is why this is such a bad idea:
1/n
Here is why this is such a bad idea:
1/n
2/ Inflation hurts lower income people alot more than wealthier people. Lower income individuals spend more of their income on necessities such as food and shelter.
3/ Higher inflation always lead into higher inflation expectation, which eventually will lead into hyper inflation.
4/ Hyper inflation, will lead to social unrest. Look at Lebanon or Venezuela
5/ As a policy maker you much rather to stay closer to deflation than inflation. Neither is good, but if you had to pick, you almost always pick deflation over hyper inflation.
6/ Japan has had deflation for years, but no social unrest. Hyper inflation always lead into social unrest.
7/ while rising rates has been tough on the markets and the housing sector, it is the price we have to pay, for the stability of the system in the long run.
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