Too late to remove the punchbowl

Fed policy is still aggressively loose, even though the recovery and surge in inflation have long been clear

In 1955, chairman William McChesney Martin remarked that the Fed “is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up”. 

Given the “long and variable lags” in the relationship between monetary policy, the economy and inflation, described by Milton Friedman, it is hard to believe the Fed is anywhere near where it needs to be today.

Martin Wolf FT 2 February 2022

https://www.ft.com/content/35ce0c88-48a7-46cc-8f2f-51c69632f43e

 

“There is a striking similarity between the questions we ask about 1914 and 2008,” writes Adam Tooze
Martin Wolf FT 17 July 2018

https://englundmacro.blogspot.com/2021/12/there-is-striking-similarity-between.html

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