Here we go again. The Federal Reserve (Fed) is misreading the economy once again through a faulty inflation lens. The Fed’s members voted this week 9-3 to keep interest rates steady. The amazing thing is that three of the jerks actually voted to raise rates.
Mind you, these are the same people who let inflation roar during the Joe Biden catastrophe of a presidency because the man was a Democrat. When inflation, driven by government spending at unheard-of levels, hit nearly 10 percent, the Fed finally began raising rates. Then, with inflation still high, they lowered rates twice in late 2024 to help elect a Democrat named Kamala Harris.
Inflation steadied pretty much around 3 percent — still above the Fed’s mandate of 2 percent — by the start of Donald Trump’s second term, but two factors then caused it to start rising again. One was tariffs that raised the price of imported goods, and the other was the war with Iran, which raised gasoline prices (and thus the price of almost everything dependent on gasoline).
That means that the current bout of higher inflation is not being caused by a loose government money spigot as under Biden, but by deliberate actions undertaken by President Trump. Raising interest rates will have little or no effect on mitigating, let alone lowering, the effects of tariffs and war.
New Fed Chairman Kevin Warsh (pictured) thus finds himself in a pickle. His board would love to stick it to Trump, whom they detest, so the majority refuses to lower rates while the minority is itching to raise them. Trump appointed Warsh to implement near-zero interest rates. Sadly, that will clearly have to wait, probably till the Twelfth of Never.
As I said, here we go again. The Fed is not supposed to be political, but other than maybe Warsh, they’re all Demofiends, and most suffer from Trump Derangement Syndrome (TDS).
