Buying Quote by Paul Volcker
“The idea that when people see prices falling they will stop buying those cheaper goods or cheaper food does not make much sense. And aiming for 2 percent inflation every year means that after a decade prices are more than 25 percent higher and the price level doubles every generation. That is not price stability, yet they call it price stability. I just do not understand central banks wanting a little inflation.”
About This Quote
Source Speech: Remarks on Monetary Policy, Federal Reserve, 1979
Inflation targets of 2% cause prices to rise significantly over decades, contradicting true price stability.
In simple terms: Low inflation targets still lead to rising prices over time.
Key Takeaway
Recognize the long‑term impact of inflation targets.
Themes
economics
inflation
monetary policy
price stability
Mood
concerned
analytical
Type
policy
economic
When to use this quote
- budget planning
- retirement savings
- policy analysis
- public discourse
Key Concepts
price dynamics
central bank strategy
intergenerational wealth
Questions to Reflect On
- How does modest inflation affect purchasing power over a lifetime?
- What alternatives could achieve true price stability?
A Different Perspective
The 2% target may be politically motivated rather than economically optimal.
![“It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. [I]f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency…” quote by Paul Volcker](https://sms4smile.com/quotes/img-quotes/1ab/paul-volcker-37701_banking_it-is-a-sobering-fact-that-the-prominenc_1339309.jpg)
