Gamesmith94134: The death of inflation targeting



It seems Mr. Jeffrey Frankel would had given a good insights monetary measures on the boom-bust cycle under the death of the inflation targeting, however, the term velocity shocks occurs after the money supply targeting as the aftermath of the non-circumvented crash made the economy vulnerable to reflation caused to break down the monetary system. Thus, reactions subjected to the exchange rates on currencies also created the flights of cash flow and credit crunch once the inflation or deflation is restrained and economical growth is compromised. Perhaps, it is how we criticize how ever-reacted the FED was if credit or investment were not responded sufficiently in case of disasters.



As much of the CPI or GDP, they are just indexes to measure how vulnerable are we to the developments internally and externally. Perhaps, it is how Mr. Greensplan was proven to be wrong after the monetary easing, unfortunately, the coin is flipped in the death of inflation targeting. In term of the global financing or domestic growth, business cycle is under the pressure of the price and value, and the general public suits to the cost to the living. Since inflation and deflation is inclusively monitoring the sustainability in finance, the table turns when investments shift from macro-economical to micro-economical, and vice versa. Establishments abstains its vulnerability to profit, economy grows or falter, and we support the price through agreement of the value. Inflation or deflation became a mechanism for the protection in a way that price ameliorates to accommodate what we value. It is nature’s way or ecology of economics. Therefore, there is no miss in calculation. It is my belief that what is missing is only being substituted. Over-priced relatively to weaker income and under-valued relatively means strong dollar, they are just being replaced or displaced.



I prefer if the FED or ECB can estimate both the margins of inflation and deflation under the currencies exchange rate or both long term and short term equitable creates the comfort zone for affordability for both of the debtors and creditors. Such zone becomes the margins of affordability which could affect how investors shift or retreat with their cash to advance their profitability, and how the public can support or defy on the value and expenditure in maintaining growth.



But, each must be inbound with sustainable means or credit; eventually, there is lesser of surprise in the phrase of changing tables from micro-economic to its income earner, to macro-economic for the business cycle when credit or cash become the options to pivot point or velocity shock. Implosion and explosion are alike; they just shift as the coin is flipped.



“Germany sold €4.56 billion in two year bonds at 0 coupon, suggesting investors are so afraid of the possible outcome of the sovereign debt crisis that they are willing to get no returns just for parking their cash in bunds.” By Forbes.



Can inflation by 2% at the core for 30 years or two yea bonds at 0 coupon be guaranteed without consequence? It is not a question for disinflationary but Bundesbank.



May the Buddha bless you?

