The Bright Line between Inflation and Spending

February 19, 2023  By Jay Davidson

Talk about a tale of two realities.  Certain Wall Street Journal articles quote two Federal Reserve presidents saying interest rates will remain high for a couple more years, until business activity eases.  In other words, that's until the central bank's handling of monetary policy puts our economy into recession. Then the Journal lists several stories about softening labor markets, which translates into lower wage pressure.  And a slowdown in shipping.  Both items indicate a slowing economy.  And isn't that the reason the Federal Reserve raised interest rates so rapidly, in so short a time? Then why are these Fed presidents, voting members of the Federal Open Market Committee (FOMC), touting higher rates for years?..............To Read More.... 

The Fed Continues to Ignore Basic Economics and We Will Pay the Price Desmond Lachman | New York Post - A sign of intelligence is learning from one’s mistakes. The Powell Federal Reserve does not display this kind of intelligence. Last year, it managed to produce multi-decade-high inflation by choosing to ignore Milton Friedman’s fundamental teaching that inflation is always and everywhere a monetary phenomenon. Yet this year, it risks producing an unnecessary recession and inflation below its 2% target by once again choosing to ignore the legendary economist’s lessons................

The Nightmare Scenario: Could America Really Default on Its Debt, By Desmond Lachman February 16, 2023 - Nero is said to have fiddled while Rome burned. Today, it seems that Washington’s politicians prefer to play games with the debt ceiling. They do so at a time when the country could soon default on its debt and when the country’s public finances seem to have gone from bad to worse. Yesterday, the non-partisan Congressional Budget Office (CBO) indicated that the United States could hit the debt ceiling anywhere between July and September. Failure to raise the debt ceiling by that time would result in the U.S. government, the world’s largest sovereign debtor, defaulting on its debt. That is the last thing that the U.S. and world economies need at a time when high-interest rates are already raising the risk of a U.S. and world economic recession and when U.S. and global financial markets are already on the back foot................. 

My Take - I keep coming  back over and over again.  All this is fixable!  Default isn't necessary, and here's the solution.   Get Out of Debt Card.  But the point the author makes is a valid one.  Both parties are equally as guilty of this mess.