Thanks to the Federal Reserve, since it's inception in 1913, prices have risen 2400%! What a failure to maintain price stability! I'm not sure that they have succeeded in thier other mandate to maintain full employment either. It's seems to me that their "tinkering" with monetary aggregates has led to instability which hurts the economy and employment.
The entire notion of maintaining ANY inflation is probably in error. If there is a fixed monetary supply (without manipulation by a monetary authority), then as the economy grows, prices would fall or stay even. Falling prices are good for most people!! On the other hand, rising prices can actually benefit wealthy people who have investments in housing (using leverage of course) and in stocks. Yeah, falling prices caused by a burst financial bubble is not good, but steadily declining prices as a norm is good! (The Fed causes the bubbles and the subsequent busts!) How come people and especially bureaucrats can't get that message! (It's that "religion" of Keynesianism that's causing this). Rising prices hurt the majority of the people!.
So calls by Bernanke and people like Paul Krugman to increase inflation when it's already 2% is incredibly stupid! It hurts the majority of people!! And it benefits the wealthy! The Fed causes inequality of income! Read below about people who are making a modest wage but can not make it our economy. If you want to know why so many people are on Food Stamps, then you'll easily see why:
A Common Story of Financial Distress
Gross Income: $1,500 to $2,000
Taxes: First, they are not going to pay any Federal Income tax but still are stuck with the 7% payroll deduction, so that leaves $1400 to $1850 after tax.
Rent: Rent in Houston used to be cheap up to the 1980s and early 1990s. I moved to Houston in 1989 and paid $375 per month for a one bedroom apartment with all bills paid in one of the best areas to live. Now that same apartment costs $750 to $800 per month to rent. That's about 3.6 % rent inflation.
Gasoline: In 1989, gasoline cost about $1 per gallon. Now it's $3.50 per gallon, meaning that you will spend $100 per month for fuel.
Car Payment: A car payment will typically run about $200 per month. There is inadequate bus service in most cities like Houston.
Food prices have doubled in the past 10 years: that's food price inflation of 7%! Ouch. The minimum amount to spend on food, if you cook every meal at home is $250 per month for a single person.
Back to my friend's finances. So after taxes, car, fuel, food and rent, my "typical friend" has only $100 to $550 left. If they try to buy a health insurance policy, there is either not enough money or too little money left for all other expenses.
Most people don't have health insurance--because the price is so inflated!
Health insurance prices are rocketing skywards at annual inflation rates up to 15% in the past 13 years thanks to the "push" from government spending and increasing demand from our aging baby boomers. You'll pay $350 per month for a high deductible policy to $700 per month for a bare bones policy with lower deductible. High deductible policies will be outlawed by ObamaCare (Gee, thanks a lot Obama. With friends like that.....).
But we haven't added other expenses of dental, cable, electricity, entertainment, clothing, car maintenance, etc.
Making $2000 is not enough to survive these days thanks to inflation. And that's if you're single!! Costs are rising but wages are not.