It’s a bit too little and too late for the Federal Reserve. Do they really believe that a 3% year-end Fed Funds rate will tame 8% “official” inflation? Maybe inflation will “naturally” drift back down (though there’s no empirical data to support that view). The Fed can hope, though. They can try a little prayer if that’s still ok. Maybe a stock market crash will do it, who knows. But powerful inflationary forces are just beginning to warm on their way to a boil.
The Fed has been horribly wrong about almost everything for at least a decade now. They locked the forever money printing presses in the on-position. They thought they could grow the money supply to the moon, right out of the modern monetary theory textbook, without any adverse consequences. “Targeting” two percent inflation, for years these smarter-than-us helmsmen were puzzled that money printing just wasn’t producing inflation. They “tamed” it. Their mantra was inflation is no risk. And they slept on. But then the lion roared, and they seemed shocked that massive asset price inflation was followed by massive every other type of inflation. Continue reading “Federal Reserve Interest Rate Increases: Too Little, Too Late”