Summers: ‘Underlying Inflation’ Is 4.5 to 5% and Forecasts Overstate Ability of Monetary Policy to Slow Economy
See? This is why idiots like Larry Summers don't get it. Controlling inflation is NOT synonymous with slowing the economy. Countries like Venezuela, Argentina, Chile, Zimbabwe, and the Weimar Republic weren't having runaway inflation because their economies were booming. They were having runaway inflation because the government insisted on stealing the wealth of others by printing up more money.
If the Fed wants to stop inflation, then they should stop underwriting government deficit spending by expanding the money supply. Just do that one thing, and inflation ends today.
As for the economy, that will be up to the government. If government insists on continuing its reckless deficit spending path, then they will have to compete on the open market for excess cash by offering higher interest rates. The more money government needs to borrow, the higher interest rates will go. And THAT will slow the economy by diverting the investment dollars needed to grow it into government coffers that create no wealth or growth.
The market should be setting interest rates here, not the abundance of monopoly money generated by the FED and the arbitrary rates they set to those they hand it out to.