Janet Yellen is the leading candidate to replace Federal Reserve Chairman Ben Bernanke. Some are saying she will be tough on inflation but I’m not buying it. In a 1995 debate on the Fed’s role in controlling unemployment and inflation she said, “When the goals conflict and it comes to calling for tough trade-offs, to me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target.” The Fed’s current target for inflation is 2%. In today’s low interest rate environment that’s devastating for retirees. Compound anything, such as dinner at your favorite restaurant, at a “low” 2% rate over 20 years and watch prices increases by about 50%. Imagine the bill when inflation compounds at “above target” rates.
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