The least democratic institution in the government is the only one trying to bring down inflation. That's far too risky. Congress and White House must do more.
At this point in time, Chairman Powell is attempting to thread an imaginary needle. That is my belief. In recent years, the consecutive shocks to the economic system have not been this broad and varied in US American history during peacetime.
We all understand the importance of what Chairman Powell is trying to achieve in earnest. But that ship has sailed:
“ The Fed is trying to thread the needle of lowering inflation without causing a recession
The Fed’s decision to push up interest rates is intended to bring inflation down. Inflation is too high, and the Fed is using the one tool it has to bring it down. In the press conference, Fed Chair Jay Powell explained the Fed’s thinking. “
Perhaps, if he just needs let go of his theoretical best case outcome, and telegraphing this to the FOMC—White Picket Fence, great job, a happy wife, two healthy kids, a Cat and a Dog—and put more energy into seeking a good-best case situation under the obvious umbrella of the pragmatism of this moment. Mistakes made/not made, are all sunk costs—utterly not relevant to the forward-looking view of this great country and, perhaps, much greater economy.
Yes, Yes, Yes!! “ Congress and the White House must move heaven and earth to get gas prices down and avoid a global humanitarian crisis of starvation. Get supply up! The Fed cannot print oil or wheat. Do more. “
The real problem, henceforth, is not with the capable Fed; it is with the breakdown in the ability of the Congress to compromise, and act like adults, to truly do the People’s work in short order—which heretofore hath not occurred. At all. Zilch, Nada, Nothing, no really productive work at all this last year.
Wasted time in Congress is wasted Opportunities, the Costs of which include wasted hard-fought Goodwill and the valuation of Public Assets in our Country, right before our eyes! Legislation to deal with new situations, and new technologies, is sorely needed fast. We are decades behind. Its beyond my belief.
Finally, I couldn’t finish without adding some more vinegar and honey to Claudia’s economic remedy: Inflation is painful for the masses; but ‘pain’ is a part of life (like it, or not); could it possibly be that our(the American Economist’s—not me) attempt to ease the pain for the masses is, at best, prolonging this painful economic transition and, at worse, amplifying the natural economic shedding of inefficiencies as we adapt to a new, less global, a bit more protectionist, less steeply Greenifying economy—the actual new reality in which we live?
Do people in Europe really want to endure loss of life because their Green ideals dont allow them to purchase ‘dirty’ electricity/gas for heat-cooking? On the scale of the next 100 years and the additional concomitant alternatives to the present day Green Plan of reaching no more than a <2C degree average ambient global climate rise—and all the truly epic unleashing of the floodgates of biospheric changes that the earth has not seen in about 5 million years, perhaps we should COMPROMISE and work with the nuclear technology that we currently have(and what we learned) and begin building nuclear fission reactors as fast as we can and deal with the next 80 years of nuclear spent rod disposal at a later date? Hoping by 2100 Nuclear Cold Fusion will have become a much cleaner, reliable alternative to the by the 140yr old Fission technology before it.
My prescription, for Congress, The Fed Reserve, US Economists, and Science/Engineering Leaders is the same: much, much less rigidity in our thought. More openness to new, unconventional means of accomplishing objectives. Pay less attention to the politics of the day, and what our social aether thinks. Do what we know to be right—no matter what. Be flexible with our plans—they should be living, breathing, adapting tools that adjust to the changing terrain before us. All rigid plans, like our inflexible thinking, will be relegated to the junk-heap of history’s failures—I can attest to this fact. Cut across the grain, not with the grain.
To combat Climate Change our entire Civilization must change. The cheapest, most mobile Energy source *is* the Adversary. Viewed from that perspective perhaps today's inflationary economy is "a feature not a bug". And any such change will naturally hit the poorest hardest.
If that's the negative attitude perspective then the positive attitude trend must be that energy change calls for an uncomfortable dislocation in the complex energy system which is just not being optimally managed - all we need is to Do Better. [If that is a 'straw man' I apologize - don't believe it myself.]
Occasionally you suggest Congressional policy alternatives to the Fed's limited monetary quiver, such as legislation on environment today or fiscal stabilizers along with ARP. Taxes on wealth or high income could also lower demand. Should you or Chairman Powell recommend Congress raise taxes or is that the the Fed's third rail?
At this point in time, Chairman Powell is attempting to thread an imaginary needle. That is my belief. In recent years, the consecutive shocks to the economic system have not been this broad and varied in US American history during peacetime.
We all understand the importance of what Chairman Powell is trying to achieve in earnest. But that ship has sailed:
“ The Fed is trying to thread the needle of lowering inflation without causing a recession
The Fed’s decision to push up interest rates is intended to bring inflation down. Inflation is too high, and the Fed is using the one tool it has to bring it down. In the press conference, Fed Chair Jay Powell explained the Fed’s thinking. “
Perhaps, if he just needs let go of his theoretical best case outcome, and telegraphing this to the FOMC—White Picket Fence, great job, a happy wife, two healthy kids, a Cat and a Dog—and put more energy into seeking a good-best case situation under the obvious umbrella of the pragmatism of this moment. Mistakes made/not made, are all sunk costs—utterly not relevant to the forward-looking view of this great country and, perhaps, much greater economy.
Yes, Yes, Yes!! “ Congress and the White House must move heaven and earth to get gas prices down and avoid a global humanitarian crisis of starvation. Get supply up! The Fed cannot print oil or wheat. Do more. “
The real problem, henceforth, is not with the capable Fed; it is with the breakdown in the ability of the Congress to compromise, and act like adults, to truly do the People’s work in short order—which heretofore hath not occurred. At all. Zilch, Nada, Nothing, no really productive work at all this last year.
Wasted time in Congress is wasted Opportunities, the Costs of which include wasted hard-fought Goodwill and the valuation of Public Assets in our Country, right before our eyes! Legislation to deal with new situations, and new technologies, is sorely needed fast. We are decades behind. Its beyond my belief.
Finally, I couldn’t finish without adding some more vinegar and honey to Claudia’s economic remedy: Inflation is painful for the masses; but ‘pain’ is a part of life (like it, or not); could it possibly be that our(the American Economist’s—not me) attempt to ease the pain for the masses is, at best, prolonging this painful economic transition and, at worse, amplifying the natural economic shedding of inefficiencies as we adapt to a new, less global, a bit more protectionist, less steeply Greenifying economy—the actual new reality in which we live?
Do people in Europe really want to endure loss of life because their Green ideals dont allow them to purchase ‘dirty’ electricity/gas for heat-cooking? On the scale of the next 100 years and the additional concomitant alternatives to the present day Green Plan of reaching no more than a <2C degree average ambient global climate rise—and all the truly epic unleashing of the floodgates of biospheric changes that the earth has not seen in about 5 million years, perhaps we should COMPROMISE and work with the nuclear technology that we currently have(and what we learned) and begin building nuclear fission reactors as fast as we can and deal with the next 80 years of nuclear spent rod disposal at a later date? Hoping by 2100 Nuclear Cold Fusion will have become a much cleaner, reliable alternative to the by the 140yr old Fission technology before it.
My prescription, for Congress, The Fed Reserve, US Economists, and Science/Engineering Leaders is the same: much, much less rigidity in our thought. More openness to new, unconventional means of accomplishing objectives. Pay less attention to the politics of the day, and what our social aether thinks. Do what we know to be right—no matter what. Be flexible with our plans—they should be living, breathing, adapting tools that adjust to the changing terrain before us. All rigid plans, like our inflexible thinking, will be relegated to the junk-heap of history’s failures—I can attest to this fact. Cut across the grain, not with the grain.
<ljb, 6/30/22>
To combat Climate Change our entire Civilization must change. The cheapest, most mobile Energy source *is* the Adversary. Viewed from that perspective perhaps today's inflationary economy is "a feature not a bug". And any such change will naturally hit the poorest hardest.
If that's the negative attitude perspective then the positive attitude trend must be that energy change calls for an uncomfortable dislocation in the complex energy system which is just not being optimally managed - all we need is to Do Better. [If that is a 'straw man' I apologize - don't believe it myself.]
Occasionally you suggest Congressional policy alternatives to the Fed's limited monetary quiver, such as legislation on environment today or fiscal stabilizers along with ARP. Taxes on wealth or high income could also lower demand. Should you or Chairman Powell recommend Congress raise taxes or is that the the Fed's third rail?