Still Rethinking the Fed

Time to Rethink the Fed
Who Needs Central Banks?
A Benchmark for Everything
This Can’t Continue
How Then Should We Change the Fed?
Updated Thoughts
Austin, Colorado, Tulsa, and Home

Back before clocks went digital, you could say “a stopped clock is right twice a day” and even youngsters would know what you meant. A mechanism could be nonfunctional but occasionally correct.

So it is with the Federal Reserve and its leaders. They make many mistakes but sometimes get it right. They are doing so now, in my view, by prioritizing inflation control ahead of growth. This doesn’t excuse the past mistakes, though—especially since they helped create this inflation.

This week I’m traveling and unable to write a full letter, so I’m instead going to revisit a theme I have written about in the past and is still very appropriate today. The most recent was last year in Time to Rethink the Fed. Judging by the number of comments, it was one of the most engaging letters in recent memory. I wrote it as inflation was proving non-transitory but before the Russia attack on Ukraine spiked energy prices and put inflation on overdrive.

In hindsight, my opinions have not changed much but I do have a few additional insights.