No one controls inflation, the only variable under control is the cost for a bank to receive money from a central bank (an interest rate).
Any value of an interest rate is a political tradeoff: a low rate favours spending, a high rate favours saving. So a low rate promotes expansion and an excess of cash in the system; a high rate promotes contraction and a relative deficit of cash. No value for an interest rate is "correct", it is an ethical decision. And the effect of a given rate will depend on economic variables that are basically unmeasurable (eg., aggregate preference for future consumption at a given rate) and have to be determined by best-guess expert judgement.
What would an algorithm do? Who would create it? Who do you think would create it?
My view is that replacing any aspect of politics (, law, etc.) with "algorithms" has a pretty clear line to feudalism or similar. Political judgement should never be naively deterministic in a chaotic, unmeasurable and unmeasured world.
A deterministic "politics" makes its power structure eternal and immutable. Do we change the alg when the world changes? No, that's just status quo. We mean an alg that never changes regardless of the change to the world. It's mad.
I can see where you're going with this. An algorithmic approach without a political fallback can lead to feudalism because the people who control the algorithm, control everything.
This is why I teeter on "end the fed". You need an independent body not influenced by the politics, yet accountable for their performance in the end. I'm not sure they're currently accountable in a manner that matters.
Edit: when I say inflation in this context, I mean monetary inflation. That can be controlled.
Edit 2: I'm not really sure how the current system is that far from feudalism. They are literally talking about putting the plebs out of work so their (feudal overlords) cash isn't made worthless.
If you want to end fed controlled interest rates you would either need to abolish cash and replace it with cheques or introduce a demurrage currency as cash. Cash acts as a perpetual bond with a guaranteed 0% interest rate. If there is deflation then the nominal interest rate needs to be negative so that the real interest rate is correct again. If you can't express negative nominal interest you will have to run away from deflation aka permanently issue more money.
This is pretty much universal, even DAI (algorithmic stablecoin backed via deposited Ethereum, etc) has this problem. When DAI trades above the peg, the only answer is create more DAI and sell.
There is RAI where the answer to RAI being above the peg is to just lower the redemption rate.
The obvious answer then would be to introduce an optional dollar that has an interest rate built into it that can be negative. It doesn't have to replace every existing dollar bill, it just has to exist and in case of austerity or a recession the Fed will try to not increase the number of 0% dollars in circulation. This will make regular dollar bills trade above their face value meaning people are less likely to transact with 0% cash and instead electronic payments and the negative interest dollar will continue doing their job.
The money in Wörgl was named emergency money (Notgeld) for a reason. Fight the depression with a higher velocity of money, not more money.
Any rate a central bank sets has winners and losers, with inflation at 10%, 90% of people are losing.
The fed is being the most "economically reasonable" of almost any central bank in the world right now. The UK central is afraid of matching the Fed because property owners would be screwed, and the UK economy is more dependent on real-estate. This is compounded by Brexit (a project of those property owners) which is driving import inflation that the central bank is also ignoring.
So I, as a pro-EU UK renter, am losing out for the benefit of UK property owners wealth and political projects. I'd still vastly prefer that over whatever you might imagine the alternative is.
A similar story can be told in the reverse direction: any rate is a political decision, and the losers have a story about how they're being oppressed.
The bank of england, fed, etc. are at least aware of the consequences of their decisions and have some level of accountability. Neither of which can be said for any automated system which acts completely ignorant of these matters.
This isnt feudalism, this is politics working the best it has in human history. If you imagine you could do better, I'd suggest that hell is much closer than heaven.
I'm a fan of automated control, but with an algorithmically set inflation rate, I don't see why it would lead to feudalism.