Shockingly Irresponsible Fed Policy Led to 7% Inflation

The Fed should have been in front of this. Instead, they are far behind and must now catch up quickly.

The US Bureau of Labor Statistics just released the Consumer Price Index (CPI) increase for the month of December. The 0.5% increase means that for the entire year 2021, inflation was 7%, a 40-year high.

This poor result is primarily due to the shockingly irresponsible policy of the Federal Reserve.

For the past 40 years, the Fed has mostly kept the inflation rate at 3% or less. For the past decade, annual inflation has averaged just over 2%. Whenever there was even a hint of inflation, the Fed always stayed ahead of the curve.

For instance, at the end of 2016, there was a slight hint of inflation. The Fed raised interest rates eight times during the next two years. Fed officials said that their action took enough excess demand out of the economy to keep inflation low, but not too much demand to slow economic growth.

The U.S. Federal Reserve should have started a similar interest rate raising policy back in March or April. At that time, it was clear that the economy was growing and that excess demand was causing an increase in the inflation rate.