When did inflation become good?

Are there any other financial geeks out there with long memories?

I was watching Fed Chairman Jay Powell’s press conference today (after the release of the Fed statement), and kept experiencing cognitive dissonance each time he said something like “we want to get inflation up to two percent or a bit more.”

I think (think) I understand the need for inflation, but one of my earliest political/economic memories is Gerald Ford’s WIN campaign. It wasn’t about electoral victory; it stood for “Whip Inflation Now.” All through those years, the constant struggle was to get inflation down. That it was way too high.

And I guess, without consciously thinking about it, I subconsciously assumed that inflation is bad, and straight-line value, year to year, is good.

Now, listening to the Fed, I’m assuming the need for a little inflation is to justify annual salary raises, to justify low-level price increases, to justify paying interest, and so on. If a dollar today was worth precisely what a dollar was worth ten years ago, any company paying its employees raises would be losing money every year.

At least, that’s my assumption. Anyone else out there have a better explanation for why the Fed thinks we need to have some low level of inflation?

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