All Pain and No Gain from Higher Interest Rates

 In the name of taming inflation, central banks have deliberately set themselves on a path to cause a recession – or to worsen it if it comes anyway.

The Roosevelt report also dispenses with the argument that today’s inflation is due to excessive pandemic spending, and that bringing it back down requires a long period of high unemployment. 

Demand-driven inflation occurs when aggregate demand exceeds potential aggregate supply. But that, for the most part, has not been happening.

Instead, the pandemic gave rise to numerous sectoral supply constraints and demand shifts that – together with adjustment asymmetries – became the primary drivers of price growth.

Joseph E. Stiglitz Project Syndicate 8 December 2022

https://www.project-syndicate.org/commentary/fed-interest-rate-increases-counterproductive-all-pain-no-gain-by-joseph-e-stiglitz-2022-12

If central banks increase interest rates enough to bring inflation down to 2%, they will cause a severe economic hard landing

Nouriel Roubini Project Syndicate 15 November 2022

https://englundmacro.blogspot.com/2022/11/if-central-banks-increase-interest.html

Why getting inflation down to 3 percent is probably enough

Paul Krugman New York Times newsletter 2 December 2022

https://englundmacro.blogspot.com/2022/12/why-getting-inflation-down-to-3-percent.html

Shock Therapy for Neoliberals

https://englundmacro.blogspot.com/2022/04/shock-therapy-for-neoliberals.html