This is where you get into wild conspiracy territory. It’s not unlike saying the FDA was created to provide pharma with a captured market.
GP comment was writing about "the result" of, not "the purpose of".
-- Monetary History of the United States, pg 191, Friedman
Endemic inflation set in the next year.
In that context, his statement is fine as a historical study but may not be suitable to model current economics.
What it is is a 2% annual tax on the economy. Even worse, your illusory inflation "gains" on assets then get taxed, too.
The only thing it is good for is the politicians.
1. Constant 2% inflation at least doesn't have the negative effects of unpredictable inflation, its just a 2% tax.
2. Certain prices appear to be slightly sticky in that they don't go down, for example, wages are almost never cut in nominal terms, for psychological/cultural reasons- people tend to quit if their wages get cut. Slight inflation allows these to slowly decrease without running into the asymmetric price stickiness behavior.
What do you think?
The Fed and the government will never admit this, however, which is why they blame inflation on:
1. speculators
2. profiteers
3. wage-price spiral
4. cost push
5. demand pull
6. Putin
7. Arab cartels
8. oil companies
and about anything else they can think of. Anything but the real reason.