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It strikes me that the fed is playing two games. One game is the public facing game, where they pretend to be all concerned about inflation and Powell virtue si

It strikes me that the fed is playing two games. One game is the public facing game, where they pretend to be all concerned about inflation and Powell virtue signals about how he is so dedicated to bringing it under control, yada yada. And then there's the private game, where the Fed isn't quite as independent from the USG as it would like you to believe, and it knows that inflating away the USD denominated debt would be a great boon to the USG even if it hurts regular civilians. The jury's still out, and it's possible that Powell really does take the kinds of measures necessary to curb inflation. But if they decide to delay the rate rises due to this Russia stuff, then it would just be so obvious to me that they are looking for some excuse, any excuse, to keep on inflating.

AnimalMuppet 5y ago
I think you're missing a part of the puzzle: The Fed really doesn't like deflation, and doesn't like being up against the zero-interest-rate bound where their main weapon against it is useless. They want some inflation, and they've been trying to get it for years. It's not that they "aren't as independent of the USG". It's that they have more problems to worry about than most people recognize, and that shapes their policy in ways that surprise people.
- IAmWorried 5y ago
  I appreciate the explanation, thank you. So it seems that the Fed would much rather err on the side of inflation than potentially misstep into deflation. As someone who owns no assets, I would really love for the inflation to stop, but admittedly I have no idea what deflation is like, and historically it hasn't been pretty.
  - AnimalMuppet 5y ago
    Under current conditions, the Fed would rather err on the side of inflation. There are conditions under which that would not be true.
    - IAmWorried 5y ago
      Interesting, which conditions would those be? My intuition is prolonged periods of high inflation?
      - AnimalMuppet 5y ago
        Yes. Late 1970s, early 1980s. Inflation hit 14%. The Fed wasn't really worried about deflation in those days...

AnimalMuppet 5y ago

I think you're missing a part of the puzzle: The Fed really doesn't like deflation, and doesn't like being up against the zero-interest-rate bound where their main weapon against it is useless. They want some inflation, and they've been trying to get it for years. It's not that they "aren't as independent of the USG". It's that they have more problems to worry about than most people recognize, and that shapes their policy in ways that surprise people.

IAmWorried 5y ago
I appreciate the explanation, thank you. So it seems that the Fed would much rather err on the side of inflation than potentially misstep into deflation. As someone who owns no assets, I would really love for the inflation to stop, but admittedly I have no idea what deflation is like, and historically it hasn't been pretty.
- AnimalMuppet 5y ago
  Under current conditions, the Fed would rather err on the side of inflation. There are conditions under which that would not be true.
  - IAmWorried 5y ago
    Interesting, which conditions would those be? My intuition is prolonged periods of high inflation?
    - AnimalMuppet 5y ago
      Yes. Late 1970s, early 1980s. Inflation hit 14%. The Fed wasn't really worried about deflation in those days...