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The text explains how past episodes of rising prices damaged the Fed’s credibility, how misconceptions about a long-run unemployment–inflation trade-off and the benefits of mild inflation shape expectations, and how recent policy timing may have been misread as prioritizing near-term employment over price stability. It then frames the resulting real economic costs and the potential remedies available to the Federal Reserve, the Administration, and Congress.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/skepticism-about-the-direction-of-inflation-causes-costs-and-cures/324373/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/skepticism-about-the-direction-of-inflation-causes-costs-and-cures/324373.png","ImageObject",300,407,{"name":92,"@type":93},"Theodora","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-22","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":52},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"Why are many Americans skeptical about maintaining price stability?","Question",{"text":112,"@type":113},"The text links skepticism to past periods of uncontrolled inflation that eroded the Federal Reserve’s credibility and to the public’s belief that inflation will rise even when current policy targets price stability.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"What misconceptions contribute to skepticism about inflation and monetary policy?",{"text":117,"@type":113},"It cites beliefs that a long-run trade-off exists between unemployment and inflation and that a little inflation benefits the economy, including arguments used in major media.",{"name":119,"@type":110,"acceptedAnswer":120},"How have Federal Reserve actions affected public interpretation of its goals?",{"text":121,"@type":113},"By cutting interest rates immediately after weak labor-market reports, the Fed fostered an impression that it focused on near-term employment growth rather than price stability, which the text argues is not the true intent.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},324373,1790071831,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":52,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},687197207919,"https://ap-avatar.wpscdn.com/avatar/a000253d6f5f7c60be?x-image-process=image/resize,m_fixed,w_180,h_180&k=1779446848396160552","by Jerry L.Jordan  \nDumper stickers sometimes conveyimportant ideas.In the 1980s,a familiarone on America's highways read\"VISUALIZE WORLD PEACE.\"Theunderlying idea was that visualizinghelps people behave in ways that tend tobring the vision to reality.  \nIn the 1990s,I would like to see abumper sticker that says “VISUALIZEPRICE STABILITY.”If everyonetoday acted on the belief that thedollar's purchasing power wouldremain constant,households and busi-nesses would make decisions quite dif-ferently,with overwhelmingly benefi-cial effects for the economy.But manyAmericans are skeptical about thegovernment's ability—as well as itsresolve—to keep the price levelstable,and this skepticism is hamper-ing the nation's economic performance.  \n■ The Current SituationDuring the 1992 presidential cam-paign,the performance of the economywas the No.1 issue.With the electionover and a new administration soon tobe in place,White House efforts tofoster more rapid economic growththan seen in the last few years willun-doubtedly receive top priority.  \nA number of factors,including the glutof commercial office space,the reduc-tion in national defense spending,andthe adaptation of business practices toinformation processing technology,have certainly contributed to theeconomy's sluggishnessAdjusting to  \n# Skepticism about the Direction ofInflation:Causes,Costs,and Cures\n\nsuch fundamental changes will requiretime,patience,and an economic en-vironment in which households andfirms can make sensible long-rundecisions about consumption,savings,and investment.  \nInflation currently is low,but unfor-tunately,the public does not expect thatto be the case in the years ahead.Thisskepticism is evidenced by the dis-parity between what people see andwhat they foresee.Over the last severalyears,inflation has been trending down(now hovering around 3 percent),andthere is evidence that it is likely to staylow for the next year or two.Further-more,the avowed intent of the FederalReserve's key policymaking body,theFederal Open Market Committee(FOMC),is to keep a tight rein onprices.Domestic policy directives is-sued by the FOMC in recent years allstate thatthe Committee seeks mone-tary and financial conditions that willfoster price stability.  \nNevertheless,the public continues toexpect inflation to heat up.Long-terminterest rates have remained stubbornlyhigh—the yield curve is the steepestin history—and people seem tobelieve that when the curve flattens,itwill be the result of short rates risingrather than long rates falling.Surveysshow that consumers are anticipatinginflation of about 4 percent over thenext 12 months and 5 percent onaverage over the next five to ten years.The consensus Blue Chip forecast is  \nDecember 1.1992  \nEven though the Federal Reserve hasbeen successful in keeping inflation incheck over the last several years,anddespite its avowal to continue targetingprice-level stability as its top priority,most Americans are still making finan-cial decisions conditioned on the beliefthat inflation is likely to be higher in thefuture than it is today.Here,ClevelandFederal Reserve Bank PresidentJerry  \nL.Jordan discusses the reasons for thispublic skepticism about price stability,the real economiccosts entailed,andthe ways in which Congress,the FederalReserve,and the new administrationcan help.  \nfor the 30-year Treasury bond rate tohit 7.5 percent next year and 7.7 per-cent in 1997.Such rates would be ex-tremely high in a stable price environ-ment.Furthermore,consumers havebeen refinancing their mortgages andcorporations have been borrowing iong-term money in record volumes at fixedinterest rates that are quite high,unlessone believes inflation will once againreach the 4 to 5 percent range.  \nSuch behaviorby millions of Americansreflects a general skepticism about theprospects for achieving and maintainingprice stability.In view of what caused theskepticism,it may be justified,but theresult entails substantial real economiccosts.Fortunately,cures are availab","cbCaipZ8FFL5iFWJ","https://ap.wps.com/l/cbCaipZ8FFL5iFWJ","pdf",1031369,"English","# The Current Situation\n## Skepticism about the Direction of Inflation\n# The Causes of Skepticism","[{\"question\":\"Why are many Americans skeptical about maintaining price stability?\",\"answer\":\"The text links skepticism to past periods of uncontrolled inflation that eroded the Federal Reserve’s credibility and to the public’s belief that inflation will rise even when current policy targets price stability.\"},{\"question\":\"What misconceptions contribute to skepticism about inflation and monetary policy?\",\"answer\":\"It cites beliefs that a long-run trade-off exists between unemployment and inflation and that a little inflation benefits the economy, including arguments used in major media.\"},{\"question\":\"How have Federal Reserve actions affected public interpretation of its goals?\",\"answer\":\"By cutting interest rates immediately after weak labor-market reports, the Fed fostered an impression that it focused on near-term employment growth rather than price stability, which the text argues is not the true intent.\"}]","Skepticism about the Direction of Inflation: Causes, Costs, and Cures | PDF",1789967747,13]