Zugzwang, Grimalkins

Posted On Mar 10, 2022 By Addison Wiggin

When the pandemic shutdowns sent the stock market tumbling, the Federal Reserve Chairman presided over a series of actions he thought were best proscribed — he and the governors agreed to cut interest rates and purchase assets to keep the system going. But all that money flooding in created speculative asset bubbles. Then it overflowed into the economy at large, creating the kind of inflation we haven’t had since Carter took a vacation from his peanut farm for four years. The kind of inflation the Fed is supposed to keep in check. The kind of inflation that reminds you prime rib is a commodity. Today we learned that the inflation rate topped 7.9% in February — its highest single increase in 40 years. We recall the warning former Fed Chairman Paul Volcker gave us for I.O.U.S.A.: “Don’t let inflation get started, because once it gets some momentum, it’s very difficult to deal with.” Volcker famously fought inflation in the early 1980s by drastically boosting interest rates. We doubt the current Chairman would dare to be so bold. Nor will he necessarily…

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