Definitely, however debt and assets are not included in CPI, they buy as much debt and assets as possible, and when most of the debts and assets are concentrated in the hands of a few, there will be even less worry about inflation
No investments are included in the PCE, which the Fed uses not the CPI.
They only buy or sell as much debt that the Fed funds target tells the New York Branch to.
PCE does not include assets and debts either, if it indeed does, we are in hyper inflation now. And you can see, they dramatically reduce the weight of housing cost in the index and increased the medicare cost in the index, due to cheaper medicare and more expensive housing, how brilliant
Humans are adaptive, if you see the future price volatility risk, you will either take less exposure or make some hedging against that risk. The much larger danger is seeing an illusion of price stability that is created by FED, while not detecting the underlying problem under the calm surface, and crashed without any preparation. FED is also human, they are not much smarter than average graduates, can not avoid human's weakness. But due to their higher level of view, they could drive larger changes, and also cause larger disasters
Yes, people are avoiding the price instability of BTC like the plague, and hedging an asset like BTC is impossibly expensive. It will never put a dent into any major currency as it currently exists.
They could be more variant, but they've become less variant over time. They are slow learners. Only a major policy change would make the Fed act as you suggest.
It is not difficult to learn to deal with price instability: Buy low and sell high, small leverage. Sometimes you gain, sometimes you lose, long term wise you gain. But for fiat money, you lose a tiny amount each day, and long term wise you are a sure loser
Central banks are playing a game which quickly erode the credibility of fiat money. From surface, it seems they can drive a forever expanding debt and forever expanding consumption, borrowing new money to pay the old debt, and grow the GDP at mean time. However, people will quickly lose trust in fiat money when they learned more knowledge about modern fiat money creation, maybe fiat money itself already collapsed long before this game run its course
