The Psychology of Targeting
Central Banks remit stability in the financial and monetary system by targeting inflation on a local level as measured in a Consumer Price Index (CPI).
The CPI and level of inflation is generally understood as the price level of goods and services, purchased by households. It is thought a good way of maintaining confidence in the money as it’s relative, to— and relatively easily understood, by — the public at large.
{Per}petuity in {Hap}pening{s}
John Nash opened his Ideal Money proposal with the observation money has a long and varied history. To put this into context; money has to be trustworthy — and inflation targeting is the current way in which Central Banks maintain and exercise their authority.
This works well most of the time: living standards generally improve — in the conventional way we understand them, at least — thanks to technology and any number of gradual advances, breakthroughs and freedoms we [perhaps] take for granted.
Framing Expectations
Inflation targeting first appeared in New Zealand in 1990 and became accepted by Central Banks around the world for achieving price stability. The UK Parliament for example, sets the Bank of England an annualised 2% target rate of inflation.
Before this, there was exchange rate management. Before that, Bretton Woods — where all currencies were pegged to the dollar; which itself was pegged to gold. All morphing from the gold standard.
Each of these monetary regimes farmed trust and work to their own psychology — probably the deepest of which [being] gold. If the most condensed forms of Central Banks are their balance sheets — indicating ability to meet longer term liabilities and provide near term liquidity — then Central Banks can be seen in a game with each other [and] is why the gold standard snapped in trust arbitration.
{S}talking (Re)fractioned Language
The common expectation for inflation and success markers of targeting is reflected in Central Bank communications — ideally, inflation becomes self-fulfilling in this light.
This allows commerce to make plans on steady ground and markets to stabilise. It also allows for players to orientate themselves on a similarly targeted basis, forming life goals, objectives and demonstrate-able experience as a result. And whether these are competitive or cooperative, places an expectation on the money — and money on the expectation.
It has been noted how Central Bank communications have changed in such aspect:
And where a non-sovereign and digital money standard now exists to provide an upgrade on gold in trust arbitration, Central Banks have noticeably and recently signalled a sea change in their communications:
Daybreak
It has been observed Bitcoin is Nash Equilibrium applied to international money markets. It has also been noted that at the end of history, reason alone will not be enough: we have the logic and rationale in place — and to paraphrase Satoshi Nakamoto, any random thing can spark it.
In this regard, the psychology of targeting will give way to a language becoming of its own imagination.
