I have recently written about the ineffectiveness of forward guidance to steer inflation expectations. Because most normal people do not understand how inflation works, they cannot form a mental link between the central banks promise to keep interest rates low and rising inflation. And since that mental link breaks down, they don’t change their behaviour.
People have a hard time understanding inflation
People have a hard time understanding…
People have a hard time understanding inflation
I have recently written about the ineffectiveness of forward guidance to steer inflation expectations. Because most normal people do not understand how inflation works, they cannot form a mental link between the central banks promise to keep interest rates low and rising inflation. And since that mental link breaks down, they don’t change their behaviour.