The Fed’s Plans To Slow Inflation Will Kill The Economy: Is A Recession Inevitable?

This segment of What’s Ahead examines a pernicious idea that has a vise-like grip on Federal Reserve policy and is widely accepted among economists and policymakers.

The notion is that the economy is similar to a machine that can be guided, such as an automobile. Hence, the Fed-speak of an economy “overheating” or needing stimulus because it’s not growing fast enough.

The belief that a handful of people in Washington can constructively drive the activities of millions of people making billions of buy-and-sell decisions each day is beyond preposterous. The Fed is now trying to engineer a slowdown because of its belief that too much economic activity causes inflation. Creating too much money that undermines the value of the dollar is the real cause.

This coming Fed-engineered recession is unnecessary.

From the late 1980s through the late 1990s, the Fed focused on the integrity of the dollar. It should do so again.