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Why the Federal Reserve has made a historic mistake on inflation
- cols 4y agoArchive: http://web.archive.org/web/20220421140918/https://www.economist.com/leaders/2022/04/23/why-the-federal-reserve-has-made-a-historic-mistake-on-inflation http://web.archive.org/web/20220421140918/https://www.econom...
- incomingpain 4y agoCtrl F "why" and it's only the title. In the article I don't see the why. The why is simple. Trump signed the cares act for 2.2 trillion: https://en.wikipedia.org/wiki/CARES_Act https://en.wikipedia.org/wiki/CARES_Act then Trump signed for another 2.3 trillion: https://en.wikipedia.org/wiki/Consolidated_Appropriations_Act,_2021 https://en.wikipedia.org/wiki/Consolidated_Appropriations_Ac... then biden signed 1.9 trillion: https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_2021 https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_20... None of this was funded because people sat at home unemployed not working and therefore not paying taxes. So you have 6 trillion in new spending and X amount less in revenue. It's a bad news bears situation. It's worse, the fed trying to pay for this 6 trillion went even further and sent their central bank balance into space. VERY far from any balance, just to keep various markets from melting down. They essentially printed a ton of money. They can't raise rates, it basically destroys everything they have done. Yet they better start raising rates. So these 'assets' according to the fed are in fact liabilities. The consequences arent even all realized yet. USA will very likely lose their reserve currency status and start feeling their debt for the first time. So in hindsight... was it the right thing to do? These are going to be some global impacting consequences. Was covid really that bad? Were there better options?