Eli5: The idea of inflation is headline news this week in the US. What is magic about a 2% inflation target as opposed to 3%?

Question

Is there some sort of mathematical reason behind this goal? Does 3% have some sort of long-term effects such that it becomes uncontrollable or something?

It seems like, inflation or not, places are just as busy (restaurants, Target/Wal-Mart, Costco, etc…).

In: Economics

Answer 1

I just watched a YouTube video of lex Fridman and Michael Saylor. Saylor discusses how the real inflation rate has been around 7% for the last 90 years.He discusses how CPI the governments measure of inflation is a basket of goods and services which the government constantly changes.He discusses how assets are not used to measure CPI.Inflation is taxation by stealth.