Fickle Fed ‘Strikingly Behind’ In Inflation Fight

Well here’s a downer for ya in the midst of a hot economy & flaming inflation. The WSJ is too honest in warning “The Fed Has Never Successfully Fixed a Problem Like This.” That’s “never”, folks, as in “never.”

While the newspaper notes the nation’s Central bank is insisting “it is possible” to “calibrate its interest rate increases [charged to banks] to slow booming demand,” the reality is “many factors are out of its control [and] they are strikingly behind” in implementing those corrective measures they could have instituted long ago without triggering a recession and “significantly raising unemployment.” Even Fed ally US Treasury Sec Janet Yelen thinks the belated gambit for at least a “Soft Landing” is likely to fail because it will “require skill and also good luck.”

The WSJ was more blunt: “During the past 80 years, the Fed has never lowered inflation as much as it is setting out to do now – by 4 percentage points – without causing recession. One wild card in the Fed’s favor is the historically low unemployment rate that’s likely to stay there for the foreseeable future. Still, other wild cards going against the Fed is the Russian war against Ukraine, Biden’s War on Fossil Fuels, the continued printing of money to “pay for” BBB & Green New Deal initiatives, ongoing supply chain bottlenecks, record job openings & dearth of workers to fill them, and a lingering Covid lockdown mentality … as well as the fact that the Fed started to raise interest rates way too late & is balking at a quick catch up plan. Unfortunately, said Stanford economist John Taylor, “This isn’t the first time the Fed is behind,” in fighting runaway inflation, but for the first time in history “they are strikingly behind.”

Davd Soul