Is the Fed Finally Serious About Inflation?
Inflation is obviously very real. Average people can see it in action at the pumps, in grocery stores, or when they try to buy pretty much anything. But The Fed is late to the game.
Article by Thomas L. Hogan from AIER cross-posted with permission.
Until recently, the Federal Reserve wasn’t taking inflation seriously. Fed officials claimed to be serious about inflation. Fed Chair Jerome Powell said that price stability was essential and the Fed would do everything it could to restore it. Their actions, however, showed that Fed officials were not serious about solving this problem.
At their June meeting, the Federal Open Market Committee (FOMC) raised short-term interest rates by 0.75 percentage points and are expected to raise another 0.75 percent in late July. Are they finally getting serious about inflation?
The Fed’s views on inflation have evolved since the recovery from the coronavirus pandemic. In early 2021, the FOMC was focused on supply-side problems. After all, price-level increases in the early part of the year were driven mostly by used cars and related services, a side effect of the automotive computer chip shortage.
By summer’s end, the FOMC saw signs of sustained inflation. In March of 2021, their mean projection of inflation in core personal consumption expenditures (PCE) inflation was 2.2 percent for the year. By September, they increased that projection to 3.7 percent.
In the face of such inflation, the FOMC continued their expansionary monetary policy. Since March 2020, the FOMC had set short-term interest rates near zero, targeting a range from zero to 0.25 percent. They were also expanding the money supply by purchasing hundreds of billions of dollars per month in U.S. Treasury bonds and mortgage-backed securities.
By fall of 2021, FOMC members realized they had underestimated the extent of inflation and that action was needed to curtail it. In November, Powell promised they would “use our tools to make sure that higher inflation does not become entrenched.”
Despite this promise, the FOMC did not raise interest rates at its December meeting. They did not even end their asset purchase program as many speculated, but simply reduced the rate of purchases to a rate that would end the program in March rather than May.
On January 11, 2022, Powell testified that the Fed would get inflation under control and that price stability was necessary to achieve maximum employment. Yet two weeks later, the FOMC again kept interest rates near zero and continued the pace of its asset purchase program.
By early February, it was clear that the high inflation of 2021 would last into 2022. St. Louis Federal Reserve Bank President James Bullard argued the Fed should begin raising interest rates by half of a percent at its meeting in March.
But prior to the meeting, Powell said he would recommend an increase of only a quarter of one percent, a recommendation the FOMC accepted. Again, Powell refused to act aggressively to address inflation, even with the vocal support of another member of the FOMC.
On March 21, Powell said the FOMC needed “to move expeditiously to return the stance of monetary policy to a more neutral level.” But less than a week earlier, he had a clear opportunity to “move expeditiously” and refused to do so!
In May, the FOMC finally raised interest rates by half of a percent to a target range of 0.75 to 1.0 percent. They raised another 0.75 percent at their recent meeting in June. Some FOMC members expect another 0.75 raise in their upcoming meeting in late July. But will these actions be enough to turn the tide of surging prices?
Inflation is far above the Fed’s long-run target of two percent and is expected to remain so. Over the past 12 months, PCE inflation is at 6.3 percent and CPI inflation is above 9 percent. The FOMC’s June rate increase dampened expectations somewhat, but the market’s pricing of average inflation over the next five years is still above 2.5 percent. Even the FOMC’s own projections show means of 4.3 precent core PCE inflation in 2022 and 2.7 percent in 2023.
The FOMC’s expectations of short-term interest rates are higher than a few months ago but still low by historical standards. Their mean projection is just 3.4 percent by the end of 2022. By comparison, Fed Chair Paul Volcker raised interest rates above 20 percent to stamp out inflation in the early 1980s.
Chair Powell has repeatedly claimed that the Fed will use its tools to create price stability. Will he and other Fed officials finally bring inflation back toward their stated two percent target? We’ll see if there are any surprises in the FOMC policy statement on July 27th. But so far, the FOMC’s actions as well as their own projections show that they are still not serious about fighting inflation.
Image by pedrik via Flickr, CC BY 2.0. Article cross-posted from AIER.
Very late: I've tried to get him/her to join Subtack, Goes by Black Adder: The resources the United States requires to have an economy are global.
It has never been an option even from the very beginning of the United States for the United States to not be part of the global economy and it will never be an option.
What the United States did at the beginning is enter into treaties and alliances and even use its military to secure resources and keep markets open. It was the Brits and the French primarily that did that for us.
For over a hundred years now we have had to do that for ourselves. Without doing it we would have no economy to speak of and we would become slaves of another Nation almost immediately.
That Nation would be China.
The correct thing to do would be to secure the global distribution of resources by securing those resources for the benefit of the United States.
We could have easily done that at the end of WWII and then again at the end of the Cold War.
Now it would require Another Cold War. ( which means a bunch of hot Wars ) in order to accomplish it.
What we did after World War II was Secure the distribution of global resources for everyone except our enemies. This was a smart choice because it made us the richest most powerful and the freest Nation the world has ever seen.
But we have now given much of the control of the distribution of global resources to China.
Soon China will be able to take over completely because they are not afraid to use their military to further their national interests.
That's when we will all become destitute slaves.
The war in Ukraine is massively critical to the survival of Western Civilization because it means access to global resources and even more importantly would change the face of Europe which has always been of critical importance to the United States for good reason.
We cannot withdraw from the world and survived. The resources the United States requires to have an economy are global.
It has never been an option even from the very beginning of the United States for the United States to not be part of the global economy and it will never be an option.
What the United States did at the beginning is enter into treaties and alliances and even use its military to secure resources and keep markets open. It was the Brits and the French primarily that did that for us.
For over a hundred years now we have had to do that for ourselves. Without doing it we would have no economy to speak of and we would become slaves of another Nation almost immediately.
That Nation would be China.
The correct thing to do would be to secure the global distribution of resources by securing those resources for the benefit of the United States.
We could have easily done that at the end of WWII and then again at the end of the Cold War.
Now it would require Another Cold War. ( which means a bunch of hot Wars ) in order to accomplish it.
What we did after World War II was Secure the distribution of global resources for everyone except our enemies. This was a smart choice because it made us the richest most powerful and the freest Nation the world has ever seen.
But we have now given much of the control of the distribution of global resources to China.
Soon China will be able to take over completely because they are not afraid to use their military to further their national interests.
That's when we will all become destitute slaves.
The war in Ukraine is massively critical to the survival of Western Civilization because it means access to global resources and even more importantly would change the face of Europe which has always been of critical importance to the United States for good reason.
We cannot withdraw from the world and survived
he commies are so confident now that they are openly undermining the food security of the world. They are doing it in plain sight.
Putin is , of course , part of this.
Europe is paying Farmers not to grow food and are trying to take as much land out of production as possible.
We would never even have heard about what the Netherlands is doing unless the farmers rebelled. It's happening all over.
It's not just Europe. That's for sure. The reason Sri Lanka has risen up is because the government dramatically cut food production by making chemical fertilizers illegal. It's no coincidence it is happening now.
Last year I read an article about how China was buying up more than half the grain production of the world and storing it.
The article was saying China must know something we don't.
China certainly knew something alright. They are doing it. It is part of the Great reset and China is behind it.
That's what many conservatives in America don't seem to comprehend. The Democrats are just slaves of a much larger conspiracy and it doesn't stop at Klaus Schwab. It's coming from Beijing through the WEF and their enslaved, the EU Council , the Democrat Party , Etc.
Ukraine is a breadbasket for the Middle East and Africa. It's the cheap grain that keeps them alive.
China knew Joe Biden was going to be president because they knew Mark Zuckerberg was going to spend $500 million dollars stealing the election ... and Google , the fake news , Hollywood are all their slaves.
A lot of people see what's going on but don't know where it's coming from and , therefore , don't know how to stop it.
People rooting for Putin by not supporting Ukraine are useful idiots...or worse.
The left are also useful idiots. The majority of the world are useful idiots.
The Communists , oligarchs, Davos cabal, whatever you want to call them are relying on the people and individual Nations not rising up all together and overthrowing them as well as cutting off China.
Extricating China from the global economy would be painful but necessary. We did it to the Soviet Union. If we had not we would have lost the Cold War. We have to do it to China and we have to remove this Communist cancer from our politics and our societies.
People are so ignorant that they won't do well if it's done at all. It will cause global calamity.
The global food supply is global. That's why the Chinese were stockpiling food last year. They knew this was coming. They were the ones that were planning it.
When the Netherlands stops producing food it affects the global food supply. When Ukraine stops producing food it affects the global food supply. It affects us. It increases the price and creates shortages.
The US could easily feed itself if we stopped exporting food and stopped using our Farmland to produce ethanol. The global food supply is global. That's why the Chinese were stockpiling food last year. They knew this was coming. They were the ones that were planning it.
The 'fed' is a foreign owned Jewish bank started by Rothschilds and Morgans.
What you call "the national debt" is CREATED via the ISSUANCE OF OUR MONEY.
You can NOT "pay off the national debt"...EVER. It is IMPOSSIBLE, because the money you would print to pay the debt INCURS MORE DEBT.
Look at the front of your money. What does it say? Federal Reserve NOTE.
Let's google the definition of "NOTE", shall we?
NOTE: noun: (1): a written promise to pay a debt.
So, your "money" isn't "money" AT ALL. What you all are carrying around in your pockets are IOUS to a FOREIGN BANK.
Guess what SECURES this debt?
Your birth certificate, using which you get your Social SECURITY number.
HUH. I bet you're learning 10x more about money from my comment than that entire article. But lets go even DEEPER.
There is NO SUCH THING as "INFLATION".
This is how the issuers of our fiat paper "money" FOOL us into thinking they are but outside participants.
It gets CHEAPER to make things, not more expensive.
The only thing you REALLY have is the DEVALUATION OF YOUR MONEY.
Things don't cost more. YOUR MONEY IS WORTH LESS. Suddenly, 'saving' doesn't make as much sense, does it?
This all comes back to that fiat paper currency having the word "NOTE" on it. Because the issuers of our money make money via the repayment of debt, this means that there is an INCENTIVE TO DEVALUE THE CURRENCY BECAUSE IT MAKES THE ISSUER MORE MONEY.
When you have "fractional reserve lending" and "money issued as debt", THIS IS THE NATURAL COURSE OF MONEY. They will ALWAYS devalue it because there is an INCENTIVE to devalue it.
Now, our money USED to be backed by gold and, more importantly, SILVER. If any of you have any silver certificates lying around, take a look. The word "NOTE" is NOWHERE TO BE FOUND. It is a CERTIFICATE, meaning that paper is CERTIFIED to represent an actual amount, in holding by the issuer, of PHYSICAL SILVER. What does THAT mean? That means, as precious metals are a COMMODITY, and there is a GLOBAL COMMODITY MARKET, then it BEHOVES THE LENDER TO KEEP THE VALUE HIGH. This is so you don't take your gold and silver to a FOREIGN BANK for FOREIGN MONEY.
This is why metal-backed money ALWAYS GAINS VALUE, and FIAT CURRENCY ALWAYS LOSES VALUE.
You guys learning anything yet?
Let me tell you one more thing to really get you thinking.
The vast majority of you pay "federal income tax". First off, know that there is NO LAW REQUIRING MOST OF YOU TO DO THIS. But that's a topic for another time. What IS important for today, is if you take a look at the report commissioned by Ronald Regan (it could be the Reese commission report, but I might have that wrong it's been a few years and this is all from memory), Ronal Regan asked, "Where do American's federal income tax dollars ACTUALLY GO?"
I bet most of you right now are thinking...oh, my federal income tax build roads and fund schools and feeds the poor and, sure, maybe buys a few guns or bombs for the Army, but...yeah, that's probably where my federal income tax goes.
And you would be 100% wrong.
According to the report commissioned by Ronal Regan, 100% of the money collected as "federal income tax" goes STRAIGHT TO THE FEDERAL RESERVE BANK, where it is GONE FOREVER.
Wait, what did I just say? That's right, your "federal income tax" IS THE INTEREST PAYMENT FOR THE DEBT CREATED BY THE FACT FOREIGNERS OWN OUR CENTRAL BANK AND NOT US.
Might I suggest you read "Modern Money Mechanics"? It's widely available as .pdf on the web.
Oh, and you might want to take a peek at "The protocols of the learned elders of Zion" while you're at it.
Do me a favor. Let me know if you're looking for anyone to write REAL articles.