The Fed Deflects Blame For Inflation, Again

The San Fran Fed said it was government stimulus during the pandemic that led to current inflation… but kept mum on the zero interest rate policy the Federal Open Market Committee (FOMC) has been following. In April 2021, the Fed said that it was going to aim for “inflation moderately above 2 percent for some time” before raising interest rates. That was a year ago. It’s now clocking in at 7.9% as we’ll see below. The San Fran Fed researchers still laid their claim at the foot of fiscal policy, most notably in the Trump administration. Most of the commentary about their report came out over the weekend when folks were getting their grill on and thinking about the final four. They “used an index of real disposable income to untangle how much support was received by U.S. households versus other Organization for Economic Co-operation and Development (OECD) countries,” Bloomberg summarizes the salient points for the Fed study. “They found two distinct peaks in the U.S. corresponding to the CARES Act, signed into law in March 2020 at the onset of Covid-19 (Trump), and the American Rescue Plan Act a year later (Biden).”