RE:Fed's Mishkin Says Fed Wants to Contain Inflation Expectations

Nick — Wed, 02 Jul 2008 11:00:00 GMT

Want to contain inflation expectations? How about trying this: don't buy a trillion dollars of bad debt from failing investment banks with "temporary" money which will become permanent money when those 30x leveraged institutions eventually fail. Another thing you could try: tell Congress to force the FHA to stop putting taxpayers on the line to take the losses on their 97% (or 100% with DPA) LTV "sure-fail" loans. Oh, I got another: tell the BLS their hedonic regression and product substitution BS makes the CPI less credible, and when people find out the government has been intentionally and maliciously understating inflation for 20 years by ~3% annually, it's going to be understandably difficult to continue to lie to people. Oh, and one more thing you could try: tell the government not to create 8% more money per year in national debt if it wants inflation to be lower. Finally, if you're really thinking big picture, tell Congress a consumption-based economy of unlimited government and consumer deficit spending isn't sustainable, you're sorry about the mess Greenspan made with his bubbles, and if you agree to stop spending more than you have, we'll agree to stop trying to manipulate financial markets with consistent negative unintended consequences. Those might work better than just jawboning... just a thought.