The Federal Reserve Can’t Cure Inflation On Its Own

Current inflation is caused by fiscal policy – the government has printed or borrowed about $5 trillion, and sent checks to people and businesses. America has borrowed and spent before without causing inflation. People see extra debt as a good investment. This stimulus leads to inflation, thus reflecting a broader loss of confidence that the United States will repay its debt.

The Federal Reserve’s monetary policy tools to address this inflation are inadequate. By raising interest rates, the Fed pushes the economy toward a recession. It hopes to boost just enough to offset the fiscal boost of stimulus. But the monetary brakes and the loose fiscal accelerator pedal misfired the economic engine.

https://www.wsj.com/articles/the-federal-reserve-cant-cure-inflation-alone-recession-interest-rates-unemployment-credit-spending-costs-11656344123 The Federal Reserve Can’t Cure Inflation On Its Own

Mike Fahey

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