[lbo-talk] Fed: c'est tout, for now

Doug Henwood dhenwood at panix.com
Thu May 1 07:38:31 PDT 2008


On May 1, 2008, at 10:32 AM, Robert Wrubel wrote:


> Thanks. In my simplistic understanding, the only weapon the Fed
> has to fight inflation is raising interest rates, an almost
> unthinkable act in the present. So I wondered why they mentioned
> it at all.

It was their way of saying "don't expect any more of these cuts for a while." Of course, if another bank hits a wall, then all bets are off.

At some point, our foreign creditors may worry that we're going to inflate our way out of our foreign debts - not just worry, but actually do something about it. The Fed has to be a little nervous about that. Especially if they are trying to inflate our way out of debt!



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