Of Kiwis and Currencies: Neil Irwin

The transcript discusses the origins and global adoption of the 2% inflation target, starting in New Zealand. It explores the debate on whether this target is adequate, considering alternative views like a 4% model. The discussion includes the differences between core and headline inflation, the psychological and practical aspects of inflation targets, and their impact on savings and global economic imbalances. The transcript highlights the challenges faced by central banks, particularly the Fed, in managing inflation and savings in a changing global economy.

What was the initial country to adopt the 2% inflation target, which later became a global standard?

• New Zealand

• Canada

• United Kingdom

• United States

Why do some economists believe the 2% inflation target might be problematic?

• It limits central banks' flexibility in economic crises.

• It is based on outdated economic models.

• It causes excessive wage inflation.

• It is too high for economic growth.

What is one of the psychological benefits of the 2% inflation target according to the discussion?

• It simplifies market expectations and provides clarity.

• It provides a scientific basis for economic policies.

• It ensures higher wages for workers.

• It guarantees low interest rates.

How does inflation act as a disincentive to save, particularly in the United States?

• It leads to higher interest rates on savings accounts.

• It reduces the real value of saved money.

• It encourages excessive consumer spending.

• It increases the value of savings.

What is one of the global issues related to savings that is highlighted in the discussion?

• Americans save more than the rest of the world.

• Americans save less compared to other countries, causing imbalances.

• There is a global surplus of savings in the United States.

• There is no significant difference in savings rates globally.