https://www.wsj.com/articles/trump-complains-about-rising-in...
https://www.nytimes.com/2019/09/11/business/economy/bonehead...
Not that the Fed doesn't deserve criticism, because they do, but the public would be pissed about many of the measures that combat inflation as well, and the politicians would make sure they know who to blame (hint: not themselves).
Eh, not entirely. There's also a war going on, which has had serious impacts on the food an energy markets. Plus the supply chain is still all out of whack due to COVID. Neither of those is due to "out of control government spending and printing of money."
The people who reflexively complain about "out of control government spending and printing of money" have predicted 12 of the last 1 bouts of inflation.
1) The US could have pursued a COVID policy of “Kill Grandma, Save the Dollar,” and still had supply chain issues. We live in globalized economy, and China's COVID policy is just as significant to the supply chain as the US's (or even more so).
2) Even if the US's COVID policy did cause inflation, a policy along those lines may have still been the right one, given the circumstances. People monomanically focused on one or a few metrics (like inflation) usually advocate shit policy that's bad for everything else.
The supply chain is affected way more by what China does than by any other country. I do not think that supply chain and inflation problems are just happening in the USA but world wide.
This phenomena is so concrete that it was seen in the gold rush era, and even when tobacco leaves were used as currency in the south. There's plenty of historical data to back this up.
- in the summer of 1995, the Clinton administration admitted that “balancing the budget is not one of our top priorities.”
"It worked quite well" meaning:
"We have a balanced budget today that is mostly a result of 1) an exceptionally strong economy that is creating gobs of new tax revenues and 2) a shrinking military budget." - Stephen Moore
https://archive.ph/OD4nl#selection-1643.78-1643.91
Whoever was to blame, the issue is that politicians have been disconnected from spending constraints for too long. There are no controls that impact them when they fail to perform one of their basic duties. Deciding how to spend tax revenue has morphed into deciding how to spend future revenue across all strata of politics (local to federal). The 91fwy express lanes from 1994 are STILL tolls, which was supposed to be converted to additional freeway lanes decades ago, based on the initial project. Nope, money in the hand and promises of money in the future, is what the cities want. From this, we get wasteful slush-fund industries (eg lotteries, etc).
In general, lowering demand for goods will decrease upward price pressure.
Unfortunately, rapid rate increases are needed. The downside will be painful. The crying, screaming, bargaining and delusion we are seeing is normal as money gets expensive, asset values drop and times get harder.
Interest rates should be returned to their norm, around 5%, for sound resource allocation (i.e. the time value of money is priced correctly).
Fiscal policy, specifically wealth taxes, should be used to cushion low and middle incomes from this painful readjustment.
"Soak the rich" is a nonstarter if you're after tax revenue (as opposed to intentionally stoking widespread social envy for political gain), and everyone knows it. The middle class is where the real money is.
Solving tax evasion is simple. All capital boils down to something you can put your hands on.
A budget takes time to make, vote on and spend (or not spend). To be effective it must also align with monetary policy. Changing rates has a much quicker effect.
By the time Congress agrees on what to cut the inflation might even be low - due to Fed action, a recession, or repairing of the post-Covid logistic issues.
It’s the same play Tories have run in the UK, for much the same reasons—winning minorities and working class rural people away from Labour. And it’s resulted in exploding government spending there too.
- an un-clean reopening where many states just dropped restrictions and let people go all of a sudden.
- combined with snarled supply chains.
- combined with a labor shortage.
And then on top of that:
- a war between a major oil exporter (Russia) and a major food exporter (Ukraine).
- COVID lockdowns in China making goods yet more scarce.
The Fed was in a tough spot but made good calls given the information available. Then the new stuff came in and all of a sudden we found ourselves in a pickle. The issue isn't IMO inherently too much money, it's suddenly too little supply.
All the Fed can do is nuke demand. We will not have a good time.
Trump wasn’t president in 2021. Why didn’t the FED act to raise rates then?