Even Jerome Powell Can’t Explain Inflation...

When asked to explain why the Fed targets 2%, America's No. 1 central banker stumbled like a beauty queen talking about trans-national capital flows... Here's why.

What does the Federal Reserve do?

That’s a basic question we must understand.

The central bank has two jobs as its so-called “dual mandate”: to pursue maximum U.S. employment and ensure price stability.

Ignore maximum employment for now. Today’s unemployment rate is cooked worse than your least favorite aunt’s Thanksgiving dinner. The official U.S. unemployment rate is 3.5%.

Why: Because a low number makes stupid politicians look good.

Real unemployment is much, much higher. How could it be that low when roughly 38% of the adult population is out of the workforce?

The official number doesn’t count people who take government assistance, or people who aren’t actively looking for work. There are other ways to cook the books and make the figure look lower. In addition, the government has incentivized many people not to work.

I could go on and on, but let’s focus on “price stability.”

That’s the real issue today: Tackling inflation in the economy.

The Fed’s goal is to “target” 2% inflation.

As I not…