John Kemp's piece on the impossibility of creating a true measure of inflation in a world where no two people (or families) purchase the same exact goods at the same exact time all of the time is well worth a read. His main purpose is to paint a cautionary picture for a central bank which is seemingly becoming ever more obsessed with stimulating inflationary pressures in the economy.
After explaining that 'inflation' is different for everyone, Kemp goes on to explain the various measures of inflation that the Federal Reserve has utilized in the past, emphasizing that they often paint ambiguous if not completely incompatible pictures. This supports his broader argument that the impossibility of true measurement makes manipulation risky at best, possibly devastating at worst. As he undoubtedly does a much better job with his effort than I could with a similar attempt, I will let him take it from here.
To emphasize his point that there is no such thing as inflation for a society, merely only the totality of all of the inflations of its individual members, Mr. Kemp introduces his piece with an oft-quoted and nearly as oft-villified statement by Margaret Thatcher. This particular quote states the idea that there is no such thing as society, only individuals. This idea formed the underpinning of a broader statement Prime Minister Thatcher wanted to make on self-accountability and reliance.
Particularly in the political environment in the US today, such notions have a certain relevance that makes further exploration of them worthy. Here is a blog post which does just that, looking at the roots of Thatcher's ideals in the economic philosophies of Friedrich Hayek.
No comments:
Post a Comment