Aswath Damodaran on the Future of Business Education
Masters in Business
The Fed's 2% Inflation Target
If we look at the Fed's 2% inflation target, you have zero interest rates for a decade. So you can't really blame that. It seems to be a lot of moving parts of very non-traditional type of inflation. Once inflation gets embedded in people's psyche, it starts to affect how people ask for wage increases. The only way you can break the back of inflation is to brand a people into hostages. You basically tell people don't go ask for a pay raise, you might lose your job. Don't raise prices because people might not comment, which is an economic recession.
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