Dollar Guaranteed To............

 For years, it was an unwritten rule. As of yesterday, it’s official policy: The dollars in your wallet are destined to lose at least 18% of their purchasing power during the next 10 years.

Lost in the noise of countless Federal Reserve announcements yesterday was a formal target of 2% annual inflation.

   Actually, it’s worse than 18% over 10 years. For the Fed’s favored measure of inflation is not the heavily gamed consumer price index — CPI — or the even-more-gamed “core” CPI that assumes your cost of living isn’t really affected by food and energy.

After all, CPI is currently running 3.0% year over year. Whoops, too high. Core CPI is 2.2%. Still too high.

The Fed prefers something called “core personal consumption expenditures.”

That number is currently running 1.7%.

Voila! Applying the logic only central bankers are capable of divining, there’s not enough inflation!

That’s the real take-away from the flurry of Fed declarations. Seen in that light, the announcement that the fed funds rate would remain near zero through “late 2014” is almost superfluous.

Financial repression? Old news. Even The New York Times is onto that game now, its Fed story describing “the transformation of a policy that began as shock therapy in the winter of 2008 into a six-year campaign to increase spending by rewarding borrowers and punishing savers.”

   Still, lest you think the Fed is suddenly acquiring a preference for “transparency,” some matters of policy remain sotto voce: “A weak U.S. dollar, despite its consequences, remains an unstated goal of both the Fed and Treasury Department,” says our Dan Amoss, who took the bullet watching Ben Bernanke’s news conference yesterday while Addison and a small group of us carried on with our editorial retreat in Miami.

Indeed, says Dan, “We will continue to see a global race to devalue currencies and ease government debt burdens. The Fed will not stand idly by as the Europeans, Chinese and Japanese print copious money and weaken their currencies.

“All of these central banks are going down a path from which they cannot return. They are monetizing government debts, and will continue to do so, with sad semantic arguments that they their money printing operations are not really monetizing government debts. The financial market consequences of selling assets from central bank balance sheets and shrinking money supplies are too scary for central bankers to consider.”