> As before, inflation seeks to measure the value of the currency itself, which also fluctuates in value just like everything else.
In the end the root problem is that both the EU and US suffer from having one currency for wildly different markets, which is causing a lot of issues.
> You may be also implying that some people use the wrong tool for the job (i.e. trying to use inflation as a cost of living index), but in that case the problem isn't that the tool broken, the problem is that the people are broken. The question then is not "What will it take to modify this screwdriver so that it is better at driving nails?" The question is "Why the fuck aren't you using a hammer?"
Yup, that's the second problem. "Inflation" is the _only_ tool other than stonk market indices that's being used by politicians, media and central banks to judge "how is the economy?" and derive consequences, but as shown it's much too coarse of a hammer.
> In the end the root problem is that both the EU and US suffer from having one currency for wildly different markets, which is causing a lot of issues.
What's the problem? Money is just debt. Having confidence that you can call the debt at a later date is the only property that is of true concern with currency. As long as you have the confidence, it theoretically doesn't really matter which currency you use as your IOU.
Perhaps you are suggesting that those particular currencies are losing confidence? You could especially make that case about the USD right now, methinks. But if each state/city/rural area in the USA, for example, had its own currency, would they really garner any more confidence? They are still subject to most of the same whims that is giving the USD its current look.
> "Inflation" is the _only_ tool other than stonk market indices that's being used by politicians, media and central banks
Aside from the media, which I think is a fair point – it likes the headline grabbing attention metrics, that's not really true. You are right that a primary objective of a central bank is to keep the currency stable so that people remain confident in it, so it may seem like it disproportionately focuses on the value of the currency, but that's kind of its job. But they aren't even looking at a single inflation measure. If I recall correctly, the US uses around 30 different measures of inflation internally.
> to judge "how is the economy?" and derive consequences, but as shown it's much too coarse of a hammer.
Thing is, the national economy doesn't really matter that much to your every day life, does it? As long as your local economy is strong, who cares (I mean in a self-serving way, not taking pity on those affected) if people on the other side of the country are struggling? While countries do vary, typically the nation is only concerned with big picture things like keeping confidence in the currency. The actual economic issues are for local governments to sort out.
Hence the old adage of the municipal government being the most important. And municipal governments should be looking at things like cost of living indices for their region. If they aren't, it is time for some tar and feathering.
> What's the problem? Money is just debt. Having confidence that you can call the debt at a later date is the only property that is of true concern with currency. As long as you have the confidence, it theoretically doesn't really matter which currency you use as your IOU.
The problem is the wild disparity in purchasing power. Like, with the same amount of money at your disposal, you're able to live like a king in the poorer parts of the country - but literally struggle to survive in the richer parts (i.e. urban/megalopolises). Currencies have two functions - long term value storage (which is what you're referring to with required confidence) and short-term value aka ad-hoc expenses, and that's what the wide masses use currency for mostly as they don't have much to save.
That's something that was seen as a serious problem here in the EU when the Eastern European nations were introduced in the Euro, and the predictions materialized as expected: Eastern European countries suddenly had merchants demanding Central European prices of goods (alone to prevent Central Europeans emptying the shelves and doing arbitrage trading), while pensions and wages didn't keep up with the price increases as the economy's productivity wasn't anywhere near enough. Hell, even the industrial heavyweight that is Germany struggled with that issue (the Euro was called "Teuro", from "teuer"="expensive"), the Eastern Europeans got hit orders of magnitude harder.
> You are right that a primary objective of a central bank is to keep the currency stable so that people remain confident in it, so it may seem like it disproportionately focuses on the value of the currency, but that's kind of its job.
Yeah, the infamous "the economy should be at 2% inflation" target where everyone dances around while conveniently ignoring the effects of that on the wide masses that don't have collective wage agreements.
> Thing is, the national economy doesn't really matter that much to your every day life, does it?
Media and politicians only focus about the national economy though! You won't ever hear a national news anchor talk about some random paper mill or whatever in a flyover state. But people see that the local economy is going to the gutter while politicians and media act like everything is fine. It's literally the "everything is fine" meme [1], and that's why public distrust in politicians, media and democracy itself is at rock bottom at the moment.
> Hence the old adage of the municipal government being the most important. And municipal governments should be looking at things like cost of living indices for their region.
They can't. They lack the legal authority and the tax income to do anything meaningful, and most issues are caused on a national level.
> The problem is the wild disparity in purchasing power.
While disparity in purchasing power might be a problem, what does that have to do with currency value? If you traded in apples instead of dollars/euros, the same disparity would be present. The urban accommodation seeker would have to pay three apples to every one apple the rural resident pays, changing nothing. This has little to do with currency.
> Media and politicians only focus about the national economy though!
For the soundbites to give a broad picture to the people, sure. There isn't enough time in the day to go into great detail. That is only presented to pique your interest, though. If it does, you're going to dig deeper. If you don't care, then, well, they didn't waste your time giving you a four year economics degree for no reason. Tradeoffs, as usual.
> They lack the legal authority and the tax income to do anything meaningful, and most issues are caused on a national level.
Assuming democracy, they have all the authority you are willing to give them. If you've misguidedly given too much attention to the nation and not enough attention to the municipality, time to fix the people (this is becoming a recurring theme!) There is no need to modify your screwdriver to make it better at driving nails (which also can't be done without fixing the people!). Just use the damn hammer already.
In the end the root problem is that both the EU and US suffer from having one currency for wildly different markets, which is causing a lot of issues.
> You may be also implying that some people use the wrong tool for the job (i.e. trying to use inflation as a cost of living index), but in that case the problem isn't that the tool broken, the problem is that the people are broken. The question then is not "What will it take to modify this screwdriver so that it is better at driving nails?" The question is "Why the fuck aren't you using a hammer?"
Yup, that's the second problem. "Inflation" is the _only_ tool other than stonk market indices that's being used by politicians, media and central banks to judge "how is the economy?" and derive consequences, but as shown it's much too coarse of a hammer.