The trouble is - the definition of inflation has been corrupted since 2003. CPI isn’t inflation, the expansion in total money supply in circulation is. The latter leads to the former only in free markets. The metrics are botched now. We have deflation coupled with higher prices.
To keep the government honest, its debt should be indexed to inflation.
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Kiitos. Käytämme tätä aikajanasi parantamiseen. KumoaKumoa
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And how would that leave the government the ability to handle emergency situations whether 2008-style bailouts of big banks or 2020/21-style fighting of COVID & prevention of a pandemic-led economic depression?
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This doesn’t prevent that.
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Uusi keskustelu -
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Investors can buy TIPS at present. Besides, it likely wouldn’t help, as the government controls the printing of money and can easily front-run inflation. All it would do is create securitization problems by anchoring federal debt to a future unknown inflation rate.
Kiitos. Käytämme tätä aikajanasi parantamiseen. KumoaKumoa
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I lived in Brazil when the government imposed “indexation” and it only exacerbated the inflation crisis.
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Absolutely not the same. They didn't index government debt, and that's the only thing I'm proposing indexing. The effect would be to *lower* inflation by doing away with the government's temptation to inflate away its debt.
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