For the Fed, a red card from the 1970s

Bloomberg/Niall Ferguson/12-18-2022

composite photo of Jerome Powell and Arthur Burns Fed chairmen different but similar eras

“Jay Powell may find, as Arthur Burns did, that tackling inflation is not a beautiful game.”

USAGOLD note: Ferguson walks us through the possibilities. He says the wrong call by the Fed – and it could be a matter of 25 basis points on interest rates – “can make the difference between a nasty recession and an inflationary spiral.” That might be cutting the margin of error a bit close. The real problem, in our view, is whether or not the Fed lucks out on the inflation rate and it continues to decline, or it bottoms and starts back up again. In Burns’ case it started back up again – repeatedly.

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