Federal Reserve Chair Jerome Powell has let the cat out of the bag: Our central bank believes that the best way to fight inflation is by deliberately slowing the economy, hence, the raising of interest rates.
Federal Reserve Chairman Alan Greenspan testifies before the U.S. Congress Joint Economic Committee 17 June, 1999, on Capitol Hill in Washington, D.C. (TIM SLOAN/AFP via Getty Images)
AFP via Getty Images
The actual cause of monetary inflation is the creation of too much money. The cure is to stabilize the value of the dollar. Period. The Fed did this from the late 1980s to the late ’90s, when then–Fed head Alan Greenspan openly and loosely tied the greenback to gold. The period was known as the “great moderation.” Unfortunately, Greenspan then abandoned that approach, first by tightening monetary policy and then by turning 180 degrees and letting the dollar’s value fall, which ultimately led to the catastrophic housing boom and the financial crisis of 2007-09.
As for interest rates, the Fed should leave them alone. The price of “renting” money should be set freely in the marketplace by borrower and lender.
Unnecessary Pain From Powell
Federal Reserve Chair Jerome Powell has let the cat out of the bag: Our central bank believes that the best way to fight inflation is by deliberately slowing the economy, hence, the raising of interest rates.
Federal Reserve Chairman Alan Greenspan testifies before the U.S. Congress Joint Economic Committee 17 June, 1999, on Capitol Hill in Washington, D.C. (TIM SLOAN/AFP via Getty Images)
AFP via Getty Images
The actual cause of monetary inflation is the creation of too much money. The cure is to stabilize the value of the dollar. Period. The Fed did this from the late 1980s to the late ’90s, when then–Fed head Alan Greenspan openly and loosely tied the greenback to gold. The period was known as the “great moderation.” Unfortunately, Greenspan then abandoned that approach, first by tightening monetary policy and then by turning 180 degrees and letting the dollar’s value fall, which ultimately led to the catastrophic housing boom and the financial crisis of 2007-09.
As for interest rates, the Fed should leave them alone. The price of “renting” money should be set freely in the marketplace by borrower and lender.
Source: https://www.forbes.com/sites/steveforbes/2022/05/31/unnecessary-pain-from-powell/