August 30, 2017


Amazon Kills the Fed's Inflation Target (John Tamny  , 8/30/17, FEE)

With approval of the merger having been given, Amazon quickly announced that shoppers would soon see reduced prices at Whole Foods. Good news? Actually, news like this should be put in the wonderful category. Our work is all about the getting. Thanks to innovators like Amazon, we're able to get more and more in return for our work. 

All is well? Not really, if an impressively obtuse post from Bloomberg is to be believed.

Responding to Amazon's announcement of price cuts, a reporter at the news site attempted to pour a little bit of cold water on the approved merger, writing:

"Amazon's plans to cut prices at Whole Foods is great news for shoppers, but not so much for Federal Reserve officials wondering whether they'll ever hit their 2 percent inflation target."

Wow! While media understanding of economics has long been embarrassingly bad, this post surely raised the bar. 

Assuming the Fed could manage prices in the first place (it can't), it's surely not the job of businesses to compete less aggressively, and for consumers to attain less in return for their work, just so the Fed can achieve its witless targets. Only among Fed economists untouched by reality (enabled by economics journalists equally unfamiliar with reason) could rising prices for consumer goods amount to a desirable outcome.

Back in the real world, falling prices are the historical norm within advanced economies thanks to investors constantly rewarding businesses that commoditize existing luxuries. Whether it's a ball-point pen, car or computer, all that we value in life today was once very expensive and obscure. But thanks to aggressive entrepreneurs and businesses feverishly competing to serve our needs, what's expensive and desirable is eventually rendered affordable.

Posted by at August 30, 2017 6:20 PM