The Big News of the Week is that Jerome Powell, in his virtual Jackson Hole symposium speech,

finally made it official.

The Fed's infamous 2% inflation target is now not really a hard number but an average,

meaning that each year is looked at in relation to the years that preceded it.

So prior to this change of a mandate, the Fed was claiming that each year its target

was to have a 2% rate of inflation.

Now the target is that over the course of time, inflation is supposed to average 2%.

And the reason the Fed is able to say this is because based on the measures that the

Fed uses to calculate inflation, or at least the change in consumer prices, over the

last many, many years, the rate has been below 2%.

So based on the Fed's new target of an average rate of 2%, future inflation rates need

to be above 2%.

And of course, the Fed talks to a symmetrical amount above, or obviously to create an average,

you'd have to have some symmetry.

But to the extent that we had several years of 1.5% inflation, that would require several

years of 2.5% inflation in order to create a 2% average.

But what the Fed has effectively done, and nobody is really talking about this, is it really

raised its inflation target, except we don't actually know what that target is.

So it's kind of a moving target.

But if we've had all of these years of below 2% inflation, and again, I'm using the word

inflation the way the Fed uses it, not what it actually means.

So I'm not referring to the expansion of the money supply, but the increase in consumer

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