Frank's Musings

If the appropriate thing for the Fed to do a rise in interest rates?  They’re acting just like a bathroom tile installer who squirts caulk into the hole from which a towel rack has lost its anchor--You do what you always do, no matter the problem.   

We all know that today’s inflation is not caused by cheap money.  The pandemic has stretched the economy’s abilities and disrupted supply lines (In particular, China’s draconian response has stressed inventories globally.); wider acknowledgement of climate change has begun to cause costly behavioral adjustments; the war in Ukraine has raised uncertainty in capital and food markets   All of these and other apocalyptic events are making life more demanding and can’t be resolved by slowing money velocity.

While the mistaken measures of the Fed may cause a recession, even that won’t change the fact that the world seems to have entered a unique convergence of cyclical stresses, each of which has an inflationary impact.  Therefore, in order to relieve the common social harm of these events, the country, if hot the world, needs a central coordinator of the required adjustments in many aspects of the human condition, including personal and public health, military aggression, environmental deterioration, energy transformation, gender and racial equalization, and lifestyle expectations, to name a few.

These challenges are beyond the scope of a central banker, maybe even of the U.S. President.  But he should at least start the ball rolling towards a joint universal and coordinated effort to make the planet a rational living space for intelligent and ambitious human beings.