Frances Coppola, a CoinDesk columnist, is a freelance writer and speaker on banking, finance and economics. Her book “The Case for People’s Quantitative Easing” explains how modern money creation and quantitative easing work, and advocates “helicopter money” to help economies out of recession.
The Federal Reserve has just announced a change to its inflation targeting regime. Instead of shooting to hit 2% every year, it will aim to achieve 2% “on average” over an unspecified period of time. So, if inflation runs below target in 2020 and 2021 because of a pandemic-induced recession, the Fed might allow inflation to rise above 2% and stay there during 2022 and 2023, thus achieving an average of 2% from 2020 to 2024. The idea is that by allowing inflation to run “moderately” higher, the Fed could maintain low interest rates and quantitative easing [QE] long enough to achieve full employment, rather than starting