Wednesday, June 25, 2008

What's with the Fed?

From today's statement: (emp add)
The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.
Silly Fed, have they forgotten that all they care about is "core" inflation, which excludes energy (and food) prices?

They should have done what they've done for months: ignore energy prices all together when making policy. That way they can lower interest rates and flood the market with cheap money. Sure, it weakens the dollar and eventually leads to substantial inflation, but for people owning hard assets (real estate, stocks, gold) inflation is a great way to pay off debt while effectively taxing everybody else.


They care about wage-price spirals, not inflation per se. Food and energy prices sometimes damp out. Cf

On the effects of a giant whoosh of money, absolutely. Whatever are they going to do with that enormous national debt?

By Anonymous Anonymous, at 6/25/2008 5:37 PM  

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