The Search for Inflation on a Constant Basis at 2%
Social Sciences
Volume 7, Issue 4, August 2018, Pages: 165-181
Received: Jun. 7, 2018; Accepted: Jul. 2, 2018; Published: Jul. 31, 2018
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Author
Dott Giovanni Antonio Cossiga, Board of Auditors of “Policlinico Umberto 1”, University “La Sapienza”, Roma, Italy
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Abstract
The major Central Banks consider as more stable the economy horizon, when the base value of inflation close to 2% has been reached. It is assumed that a low inflation is affecting the economy efficiency, while a greater balance between the two variables is an advantage. It must be added that basic inflation close to 2% is an abstract value, undefined, because it defines the healthy global economy evolving within the natural system compatibility. In the current global economy, achieving this level of balance is out of reach. This does not mean that an approach to the inflation basic values shouldn’t be pursued, given that a balanced relationship between price inflation and GDP may indicate a tendency to the economic system rebalance. On the other hand, a correlation between Inflation and GDP is a sign of economic instability. A signal of instability due to the debt excess affecting the world economy. Unfortunately, ten years after the serious post-speculation financial crisis, the debt burden has worsened due to the pervasive use of ultra-Keynesian policies to alleviate the side effects of the severe 2008-2012 recession. In fact the post-speculation recessionary crisis did not mitigate the problem of debt excess, but did worsen it instead due to the consequences produced by the cycle support policies. The “sword of Damocles” of excessive debt, therefore, remains hanging over the global economy. In these circumstances, trying to accelerate the economic cycle could lead to a rerun of the speculative boom already experienced. While a global economy proceeding with the aim of a contained but prolonged growth, could certainly avoid to follow the “sirens” of a growing global indebtedness. Provided that monetary and fiscal policy would not derail from the right path of economy compatible growth.
Keywords
Central Banks, Inflation Constant Basis, Global Indebtedness, Financial Crisis, Monetary Policy
To cite this article
Dott Giovanni Antonio Cossiga, The Search for Inflation on a Constant Basis at 2%, Social Sciences. Vol. 7, No. 4, 2018, pp. 165-181. doi: 10.11648/j.ss.20180704.13
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Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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