In the face of a housing market going down the crapper, and a looming credit crunch threatening to take the markets and the broader economy with it, the Federal Reserve Open Market Committee voted unanimously today to keep interest rates unchanged, and continue to focus on inflation:
"Although the downside risks to growth have increased somewhat, the FOMC's predominant policy concern remains the risk that inflation will fail to moderate as expected,"
I'm no economist, but really... fuck inflation.
A little inflation can actually be a good thing, especially to people who owe money on things like mortgages, cars, credit cards, school loans, etc... you know, most Americans. And a little inflation would actually be a very good thing for the US Treasury, issuer of nearly $9,000,000,000,000 in public debt (almost $30,000 of debt for every man, woman and child in the U.S.)
In fact, the people who benefit most from the Fed's decades long focus on maintaining record low inflation are the people who hold most of the debt. Wealthy and older Americans. (And I suppose, the Chinese government.) The Fed's inflation policy is obsessively narrow at best, and intergenerational warfare at the worst.
So fuck inflation. A few quarters of 4% to 6% inflation isn't going to kill anybody. And if a temporary cut in interest rates revives the housing market a bit and keeps a few hundred thousand families out of foreclosure, it would be well worth it.
[David Goldstein blogs on WA state politics at HorsesAss.org]