Once purchasing power is lost, it is lost forever

Once purchasing power is lost, it is lost forever and Federal Reserve Governor Chris Waller inadvertently made that perfectly clear when he spoke on Friday. He told CNBC in an interview that "What's got me a little more concerned is inflation is running softer than I thought." He's 'concerned' after we just experienced a 21% jump in the cost of living since February 2020? Tell that to the shopper at Walmart or Dollar General. Remember 'average inflation targeting'? That was a policy that the Fed implemented in August 2020 and turned out to be one of the most disastrous policy initiatives in their history dating back to 1913. 

It was defined as this, "On price stability, the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2 percent by noting that it "seeks to achieve inflation that averages 2 percent over time." To this end, the revised statement states that "following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time." We know that policy initiative completely blew up on them. 

Governor Waller implicitly confirmed that this inflation symmetry policy is out the window as if they stuck to it, they would have to tolerate a period of time of deflation in order to 'average' out the recent period of high inflation at 2%. I'll include a chart here again of how much inflation rose above its long term trend line and say again, once purchasing power is lost, it is lost forever because central bankers won't let you get it back.