Ridiculing the Fed

In response to Ben Bernanke’s comments that inflation expectations are “reasonably well anchored” Larry White responds:

Translation: Even though the Fed’s preferred measure of inflation, the Personal Consumption Expenditure deflator, is currently running at 2.2% year-over-year, above the Fed’s “comfort zone” (in which 2% inflation = price stability), TRUST US, the inflation rate will come down in 2008 even though we will be accelerating money growth with a big Fed Funds target rate cut at our next meeting, the opposite of pursuing an anti-inflation policy.

The Fed is proceeding down a dangerous path. We are experiencing quite a dichotomy with inflation above the Fed’s comfort zone and the economy experiencing a great deal of friction in the housing and credit markets (which are slowing spreading outward). Loose Fed policy encouraged this mess and now the Fed is seeking to remedy the problem with more liquidity. Yeesh!

2 responses to “Ridiculing the Fed

  1. You might find this worth a look:
    it explains the fed in such a way that is a little discomforting…

    It’s LONG 3.5 hours… but you start to get the big picture with a little historical perspective.

  2. Pingback: The “Solution” is the Problem! « The Everyday Economist

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