If you asked those in a position of power in our country who is responsible for high inflation, fingers would fly in all directions. Some blame President Joe Biden or government spending, while others say it’s the Fed’s fault. A recent Politico report indicated that those in charge of monetary policy often fall flat when trying to save the day. The outlet says that eight out of the nine times the Fed has tried to rein in inflation by raising interest rates, a recession has followed. This, coupled with increased chatter about a possible upcoming recession, leaves many experts (and non) wondering if the central bank is once again doing too little too late.

 

Politico/Ben White
8/9. That’s the Fed’s record on triggering a recession while trying to fix inflation.

The fate of the economy — and Democratic control of Congress — rests largely in the hands of the Federal Reserve, the unelected technocrats who call the shots on monetary policy.

But a look at the record shows that the Fed often stumbles in its efforts to save the day.

Nine times since 1961, the central bank has embarked on a series of interest rate increases to rein in inflation. Eight times a recession followed. The only true “soft landing” — as significant rate hikes with no subsequent slumps are called — occurred in 1994, according to a March 25 report by investment bank Piper Sandler. Not a sterling track record.

You can read the entire article, here.

 

Fox Business/Megan Henney
Government spending to blame for inflation spike, San Francisco Fed study says

Ask Democrats and Republicans what is to blame for high U.S. inflation, and they would point their fingers at extremely different culprits.

While the White House has identified supply-chain bottlenecks and other pandemic-induced disruptions in the economy for the recent price spike, GOP lawmakers have pinned it on the president’s massive spending agenda.

But now researchers at the Federal Reserve Bank of San Francisco are weighing in on the topic – and they say that massive government spending during the coronavirus pandemic has caused U.S. inflation to surge more than in other developed economies.

Read the full story, here.

 

Kitco News/Anna Golubova
Lessons from the 1970s: war in Ukraine to ‘reshape commodity markets for years to come’ – Capital Economics

If the lessons of the 1970s were to be applied to the current geopolitical situation, the commodity markets could be transformed by the war in Ukraine, according to Capital Economics.

“The experience of the 1970s suggests that the ongoing war in Ukraine and its effects on commodity prices will reshape commodity markets for years to come,” said Capital Economics commodities economist Kieran Clancy said in a report published Tuesday.

The long-term consequences that stand out include demand destruction and new energy independence goals.

You can read the full story, here.

 

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