Powell is fighting for the minds of the people

Bloomberg Opinion/Bill Dudley

Repost from 9-22-2021

“If households and businesses trust officials’ judgment, they’ll expect consumer-price inflation to stay near the central bank’s 2% target in the long run. As a result, they’ll be less likely to demand and offer wage increases, which will help ensure that any surge in inflation proves temporary.”

USAGOLD note: How does the Fed go about abrogating the inflation process? In some respects, that ship has already sailed. The Fed prints money. Prices go up. Businesses respond by passing along those increases to consumers. Consumers respond by demanding higher pay. If either fails to act, they become inflation’s victim – and neither is foolish enough to accept that outcome. Ultimately, if the Fed wants to stop the inflationary process there is only one way to do it: Go back to square one. Stop the flood of money like Volcker did in the 1980s.

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