Saturday, October 16, 2010

Here Comes The Inflation

Two top Federal Reserve officials argued for further aggressive action by the central bank, with one saying the economy needs "much more" help and the other pointing to Japan's painful lessons.

With nearly one in ten in the U.S. labor force unable to find work and already very low inflation threatening to drop further, the U.S. central bank is expected to offer the economy more support at its next policy meeting on Nov. 2-3.

Most analysts expect the Fed will embark on a fresh round of Treasury purchases, over and above the $1.7 trillion in longer-term assets it has already bought.

You've just got to love that phrase: "the U.S. central bank is expected to offer the economy more support".

The support it's "offering" -- counterfeit dollars added to a stagnant economy -- is akin to watering down the ketchup, adding cellulose flakes to the meatloaf and keeping the potato chip bag the same size while cutting the number of chips by 10%. All of those might, indeed, make the meal seem larger, but they wouldn't improve its nutritional value or its taste.

All the economy needs, of course, is for the federal government to stop its threats of higher taxes, higher health care premiums and more regulation of energy. You'd think the geniuses at the Fed would know that, but they're so wedded to the paradigm that inflation cures all slowdowns that they can't think straight.

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