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Of course, it doesn't help when you have politicians constantly making open threats against raising interest rates. https://www.wsj.com/articles/trump-complain

Of course, it doesn't help when you have politicians constantly making open threats against raising interest rates. https://www.wsj.com/articles/trump-complains-about-rising-interest-rates-calling-the-fed-my-biggest-threat-1539720681 https://www.wsj.com/articles/trump-complains-about-rising-in... https://www.nytimes.com/2019/09/11/business/economy/bonehead-trump-jay-powell.html https://www.nytimes.com/2019/09/11/business/economy/bonehead... Not that the Fed doesn't deserve criticism, because they do, but the public would be pissed about many of the measures that combat inflation as well, and the politicians would make sure they know who to blame (hint: not themselves).

nightski 4y ago
It doesn't particularly hurt either. The Fed is supposed to act independently and is solely responsible for its actions. Trying to stir up political controversy is pure FUD.
- kadoban 4y ago
  It's _supposed_ to be independent. That's not the same thing as actually being independent.
  - nightski 4y ago
    But if it is not, then it's still their responsibility. Plus the Biden administration has kept the same chairman and really it's a board, not just one person.
    - deleted 4y ago
      [deleted]
zozbot234 4y ago
There's a real alternative to higher interest rates: bring government spending under control. Notably, this was done during the 1990s Clinton administrations and it worked quite well.
- zthrowaway 4y ago
  This is the real answer. Everything else is just arguing about what type of band-aid we use. Root of the problem with inflation in this nation is out of control government spending and printing of money. Unfortunately no politician will seriously campaign to do this, as combating inflation results in a drop in economic boost, potential unemployment, etc. It stings at first but the other end of it is worth doing. Our hand will be forced one way or another to hit the brakes.
  - tablespoon 4y ago
    > Root of the problem with inflation in this nation is out of control government spending and printing of money. Eh, not entirely. There's also a war going on, which has had serious impacts on the food an energy markets. Plus the supply chain is still all out of whack due to COVID. Neither of those is due to "out of control government spending and printing of money." The people who reflexively complain about "out of control government spending and printing of money" have predicted 12 of the last 1 bouts of inflation.
    - abduhl 4y ago
      You don’t think that the supply chain issues are related to our Covid strategy of “Stay the Fuck Home” via massive printing of money to support ridiculous unemployment benefits and bridge loans to businesses? You can argue that it was necessary to prevent an economic recession, but that argument is a bit hard to take seriously as our economy currently enters recession territory.
      - tablespoon 4y ago
        > You don’t think that the supply chain issues are related to our Covid strategy of “Stay the Fuck Home” via massive printing of money to support ridiculous unemployment benefits and bridge loans to businesses? 1) The US could have pursued a COVID policy of “Kill Grandma, Save the Dollar,” and still had supply chain issues. We live in globalized economy, and China's COVID policy is just as significant to the supply chain as the US's (or even more so). 2) Even if the US's COVID policy did cause inflation, a policy along those lines may have still been the right one, given the circumstances. People monomanically focused on one or a few metrics (like inflation) usually advocate shit policy that's bad for everything else.
bequanna 4y ago
Sigh, just more #EverythingIDontLikeIsTrumpsFault Trump wasn’t president in 2021. Why didn’t the FED act to raise rates then?
- systemvoltage 4y ago
  Yea exactly, OP’s take is disingenuous.
arcticbull 4y ago
As Yellen said, the Fed was right about inflation - up until 2022 hit. We were in a vulnerable position, with an extended but not inherently problematic money supply. What happened in 2022 was a mix of: - an un-clean reopening where many states just dropped restrictions and let people go all of a sudden. - combined with snarled supply chains. - combined with a labor shortage. And then on top of that: - a war between a major oil exporter (Russia) and a major food exporter (Ukraine). - COVID lockdowns in China making goods yet more scarce. The Fed was in a tough spot but made good calls given the information available. Then the new stuff came in and all of a sudden we found ourselves in a pickle. The issue isn't IMO inherently too much money, it's suddenly too little supply. All the Fed can do is nuke demand. We will not have a good time.
- twblalock 4y ago
  The elephant in the room is that the Fed had been juicing the economy with QE and low interest rates since the 2008 crisis, and did not stop after that crisis ended despite having a decade to do so.
- blockwriter 4y ago
  What do you mean by un-clean reopening? Do you think policies ostensibly meant for favorable public health health outcomes should have been partially or selectively maintained for purely economic reasons? The former motivation was suspect in the extreme, while the latter is entirely inhumane.
  - arcticbull 4y ago
    I think that going from entirely locked down to entirely open with no intermediate steps in a lot of cases led to a glut of demand chasing a dearth of supply, especially in travel and leisure. This is more an observation, and I don't know if there was a so-called 'clean' re-opening possible.
systemvoltage 4y ago
The WSJ article is from 2018 and has nothing to do with post-COVID situation. NYT article is from 2019.
starkd 4y ago
Excellent point. I remember when he criticised Powell for raising rates back in 2018. It seemed to me to be the perfect time to normalize rates.

nightski 4y ago

It doesn't particularly hurt either. The Fed is supposed to act independently and is solely responsible for its actions. Trying to stir up political controversy is pure FUD.

kadoban 4y ago
It's _supposed_ to be independent. That's not the same thing as actually being independent.
- nightski 4y ago
  But if it is not, then it's still their responsibility. Plus the Biden administration has kept the same chairman and really it's a board, not just one person.
  - deleted 4y ago
    [deleted]

zozbot234 4y ago

There's a real alternative to higher interest rates: bring government spending under control. Notably, this was done during the 1990s Clinton administrations and it worked quite well.

zthrowaway 4y ago
This is the real answer. Everything else is just arguing about what type of band-aid we use. Root of the problem with inflation in this nation is out of control government spending and printing of money. Unfortunately no politician will seriously campaign to do this, as combating inflation results in a drop in economic boost, potential unemployment, etc. It stings at first but the other end of it is worth doing. Our hand will be forced one way or another to hit the brakes.
- tablespoon 4y ago
  > Root of the problem with inflation in this nation is out of control government spending and printing of money. Eh, not entirely. There's also a war going on, which has had serious impacts on the food an energy markets. Plus the supply chain is still all out of whack due to COVID. Neither of those is due to "out of control government spending and printing of money." The people who reflexively complain about "out of control government spending and printing of money" have predicted 12 of the last 1 bouts of inflation.
  - abduhl 4y ago
    You don’t think that the supply chain issues are related to our Covid strategy of “Stay the Fuck Home” via massive printing of money to support ridiculous unemployment benefits and bridge loans to businesses? You can argue that it was necessary to prevent an economic recession, but that argument is a bit hard to take seriously as our economy currently enters recession territory.
    - tablespoon 4y ago
      > You don’t think that the supply chain issues are related to our Covid strategy of “Stay the Fuck Home” via massive printing of money to support ridiculous unemployment benefits and bridge loans to businesses? 1) The US could have pursued a COVID policy of “Kill Grandma, Save the Dollar,” and still had supply chain issues. We live in globalized economy, and China's COVID policy is just as significant to the supply chain as the US's (or even more so). 2) Even if the US's COVID policy did cause inflation, a policy along those lines may have still been the right one, given the circumstances. People monomanically focused on one or a few metrics (like inflation) usually advocate shit policy that's bad for everything else.

bequanna 4y ago

Sigh, just more #EverythingIDontLikeIsTrumpsFault Trump wasn’t president in 2021. Why didn’t the FED act to raise rates then?

systemvoltage 4y ago
Yea exactly, OP’s take is disingenuous.

arcticbull 4y ago

As Yellen said, the Fed was right about inflation - up until 2022 hit. We were in a vulnerable position, with an extended but not inherently problematic money supply. What happened in 2022 was a mix of: - an un-clean reopening where many states just dropped restrictions and let people go all of a sudden. - combined with snarled supply chains. - combined with a labor shortage. And then on top of that: - a war between a major oil exporter (Russia) and a major food exporter (Ukraine). - COVID lockdowns in China making goods yet more scarce. The Fed was in a tough spot but made good calls given the information available. Then the new stuff came in and all of a sudden we found ourselves in a pickle. The issue isn't IMO inherently too much money, it's suddenly too little supply. All the Fed can do is nuke demand. We will not have a good time.

twblalock 4y ago
The elephant in the room is that the Fed had been juicing the economy with QE and low interest rates since the 2008 crisis, and did not stop after that crisis ended despite having a decade to do so.
blockwriter 4y ago
What do you mean by un-clean reopening? Do you think policies ostensibly meant for favorable public health health outcomes should have been partially or selectively maintained for purely economic reasons? The former motivation was suspect in the extreme, while the latter is entirely inhumane.
- arcticbull 4y ago
  I think that going from entirely locked down to entirely open with no intermediate steps in a lot of cases led to a glut of demand chasing a dearth of supply, especially in travel and leisure. This is more an observation, and I don't know if there was a so-called 'clean' re-opening possible.

systemvoltage 4y ago

The WSJ article is from 2018 and has nothing to do with post-COVID situation. NYT article is from 2019.

starkd 4y ago

Excellent point. I remember when he criticised Powell for raising rates back in 2018. It seemed to me to be the perfect time to normalize rates.