Skip to main content
Log in

The Global 2 % Inflation Standard – How Will it End?

Atlantic Economic Journal Aims and scope Submit manuscript


The Greenspan Fed took the U.S. on to a 2 % inflation standard in 1996. Europe followed with the launch of the euro in 1998. Japan finally joined in 2013. This paper seeks to demonstrate how the standard has been responsible for three serious episodes of asset price inflation in the global economy and also for the unleashing of currency warfare on a scale not seen since the 1930s. Yet the global 2 % inflation standard at least superficially is well entrenched now with the IMF assuming yet another role for itself, guardian of the new monetary “order,” describing actions by its key members to boost inflation and devalue their currencies as “courageous.” The best prospect of over-turning the standard lies within the U.S. political arena but as yet the necessary forces there are weak and ill-formed. If the U.S. were to abandon the standard it would have to accompany this with steps to prevent Europe, Japan and China from waging currency war whilst sticking to the old monetary regime. In practice much of the world would choose to join a dollar standard once the U.S. abandoned the 2 % inflation standard in favour of monetary stability. A failure of the U.S. to break with the 2 % standard would not prevent other countries (most plausibly Japan or Germany) from abandoning it, but such a road would be arduous. In both types of break-up of the 2 % standard (U.S. led and foreign led) there could be a key role for gold, though this is not essential.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions


  • Bernanke, B. (2002). “Deflation, Making Sure It does not happen here”. Washington DC: Speech before the National Economists Club.

    Google Scholar 

  • Bernanke, B. (2013). The Federal Reserve and the Financial Crisis. Princeton: Princeton University.

    Book  Google Scholar 

  • Bernanke, B. (2015). The courage to act. New York: W.W. Norton & Co.

  • Borio, Claudio, Magdalena Erdem, Andrew Filardo and Boris Hofmann (2015) “the costs of deflations: a historical perspective” Bank for International Settlements Quarterly Review, 31–48, March 18, 2015.

  • Brown, B. (2014). Euro crash: how asset price inflation destroys the wealth of nations. London: Palgrave Macmillan

  • Brown, B. (2015). A global monetary plague: Asset price inflation and Federal Reserve quantitative easing. London: Palgrave Macmillan

  • Brown, Brendan “Why reserves at the Fed should pay no interest: how to cure a Friedmanite curse”, Mises Daily, February 23 2016

  • Ebeling, Richard M “Ludwig von Mises and the Gold Standard” in “The Gold Standard” (Perspectives in the Austrian School) ed. Llewellyn H. Rockwell) Ludwig von Mises Institute, Auburn, Alabama, US, (1992)

  • Momma, Kazuo and Kobayakawa, Shuji “Monetary Policy after the Great Recession: Japan’s Experience” Javier Valles (ed), Spanish Economic Papers (Funcas Foundation, Madrid, Spain) pp. 73–101, 2014

  • Pollock, A. (2015). “Introductory essay” In B Brown, A global monetary plague: Asset price inflation and Federal Reserve quantitative easing.

Download references

Author information

Authors and Affiliations


Corresponding author

Correspondence to Brendan Brown.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Brown, B. The Global 2 % Inflation Standard – How Will it End?. Atl Econ J 44, 183–196 (2016).

Download citation

  • Published:

  • Issue Date:

  • DOI: