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Minneapolis Federal Reserve Bank president Neel Kashkari gave an interview on July 31with the television program "Face the Nation" where he answered some questions regarding the twin threats to the US economy, inflation and recession.
As with both government and banking officials and academic economists, the causes of inflation include supply chain issues, the Putin invasion of Ukraine, Covid-19, climate change, and other problems. These factors can be remedied by raising interest rates but not too much or too fast, since to do so runs the risk of recession. As Kashkari pointed out,
"But we are committed to bringing inflation down and we're going to do
what we need to do. And we're a long way away from achieving an economy
that is back at 2% inflation and that's where we need to get to."
Where does the 2% inflation number come from? Why is it specifically the goal of the Fed? According to the Mises Institute, like the "safe" 6 foot social distance between people during the Covid-19 pandemic: "The figure was plucked out of the air to influence the public’s expectations."
There's no real reason that there should be any level of inflation at all. It isn't caused by supply chain disruptions or other factors. Inflation is caused by the creation of more money which lessens the value of existing money.
