The management of the largest central banks in the world laments low inflation, which, despite operating printing presses, has not yet reached the desired benchmarks. Why is this happening, or maybe it's just statistics?
In fact, there is inflation, and it is quite high. It is entirely possible that central banks simply use statistical numbers to justify the maintenance of stimulus measures.
The authors of the publication DollarCollapse.com turn to the monetarists: "You are not looking for where you need to. Include in your models the prices of stocks, bonds and real estate, and you will see that inflation is high and continues to grow."
It is difficult to say whether this call was heard or not, but the Federal Reserve already has a model that just takes into account the above assets. As a result, inflation was at the level of 3%, that is, exactly one and a half times higher than the target of the Federal Reserve.
The main possible errors of world regulators are described below:
- Obsessions of too low inflation are wrong
- Monetary incentives in recent years have not been necessary at all, and the path to normalizing interest rates is too slow
- Estimated Bid Level Too Low
Harvard University professor Martin Feldstein said in a recent commentary on the Wall Street Journal that "the combination of overpriced real estate and stock prices has made the financial sector fragile and jeopardized the entire economy."
If monetary authorities do not heed, the likelihood of another collapse will increase – and this time, regulators will no longer have the protection mechanisms that they applied after the collapse of the dotcoms and the real estate market
The real indicator of inflation – one that has a high correlation with business cycles – is not only higher than the target values of the Federal Reserve, it is also accelerating.
Well, and most importantly, if central banks used this method of estimating inflation earlier, that is, they took into account the cost of bonds and real estate as part of the cost of living, then over the past three decades, crises and market collapses could have been avoided, since tightening monetary policy would occur in advance, as a result of which the volatility of each cycle would be much less.
However, now it’s too late to change something. The value of assets has soared to such heights that during the period of a new recession, these assets will literally fall into the abyss.