I am not an economist, so I was reluctant to call out the Federal Reserve on what I saw as short-sighted and dangerous decisions that were an overreaction to the unusual circumstances in which the world finds itself. Chair Jerome Powell has applied “performative monetary policy” which George Calhoun describes as “taking measures which everyone knows will (1) have no positive effect on supply chain problems — there is nothing the Fed can do to speed up the delivery of those blue oval [Ford] logos — but (2) may well cause real economic havoc. Fighting inflation by ‘reducing demand’ — which, perversely, means raising prices (like on your mortgage), and throwing millions out of work (as [former Fed Chair Paul] Volcker did) — is one of those ideas [economist] John Maynard Keynes warned us about.”
I was grateful, therefore, to find Calhoun’s article in Forbes in which he makes the case that Powell simply caved in to the pressure to “Do Something” about inflation. Calhoun puts “inflation” in quotes because, “just as a fever in a person can arise from many different causes — some innocuous, some annoying, some lethal — a rise in prices can issue from various sources of stress in the economy, not all of which should carry the same weight in spurring public policy.”
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